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Last Updated: 2011/10/29
Summary of question
What is the Islamic law about taking loans from non-Muslim banks?
question
I am Muslim living in Sweden. I have not been able to find a suitable job and I want to buy a small restaurant. My wife and I are planning to take a loan from a bank which we will pay back in installments. Is it haram (forbidden) to take the loan?
Concise answer

"Taking out a loan does not require permission of a qualified Mujtahid (hākim shar'a) even if it is from a government bank. The contract of taking a loan is valid, though it may be based on interest. However, if it is an interest-based loan, it is haram to take it irrespective of whether one takes it from a Muslim or a non-Muslim; from an Islamic state or a non-Islamic state except for when one is in a difficult situation which makes committing a haram act permissible.

Taking a haram loan does not become halal with the permission of a qualified Mujtahid. In order for the recipient of the loan not to commit a haram act, it is necessary that he should take the loan with the intention that it is a transaction without return, even if he knows that he will end up paying the capital as well as the interest. The permissibility of taking an interest-free loan is not restricted to being needy or to an emergency situation."[1]

To explain further, he who receives the loan should not take it with the intention of paying interest. In his mind, he should have the intention that he is not going to give interest.

It is necessary to note that it is obligatory for you to give halal and religiously allowable foodstuffs to your clients; it is not permissible to give haram things such as pork, alcohol and the likes to them, and this has nothing to do with the permissibility or impermissibility of taking a loan.



[1] - Ajwebat al-Isteftaat (Farsi Answers to Religious Queries), vol.2, question 826.

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