Category: Riba, Loans and Working in Banks

It is not permissible to sell a Loan except for the same Price at the time of demanding Payment

Question :

My brother in Allâh's religion (Hasan M.) loaned me 2,000 Tunisian dinars. We wrote a contract for that in which we mentioned the amount of the money in German currency. After the time of the loan passed, which was a year, the value of the German currency went up. So, if I gave him what was in the contract I would be giving him 300 Tunisian dinars more than what I borrowed from him. So, is it permissible for my lender to take the increase or is it considered Riba? Especially since he wants to be paid in German currency so that he can buy a car from Germany.

Answer:

The lender (Hasan M.) may not take anything other than the amount that he lent you, which was 2,000 Tunisian dinars, unless you permit the increase (of your own freewill), then there is no problem with that. This is due to the Prophet's saying:
"Verily, the best of the people are the best of them in repaying (debts, loans, etc.)."

This was recorded by Muslim in his Sahih. Al-Bukhari recorded it with the wording:
"Verily, from the best of the people are the best of them in repaying (debts, loans, etc.)."

In reference to the mentioned contract, it is not acted by and nothing is necessitated by it, as it is a contract that is not Islamically legislated. Indeed the legislative texts prove that it is not permissible to sell a loan except for the same price at the time of demanding payment, unless the person who owes the debt permits the increase as an act of kindness and reciproca- tion. This is due to the authentic Hadith that was previously mentioned.

Source:
Ash-Shaykh Ibn Baz
Fatawa Islamiyah, Vol. 3 Pages 419-420