Category: Riba, Loans and Working in Banks

The Hadith: "Every loan that brings some Benefit (to the lender) is Riba."

Question :

What is the ruling on giving a loan to a person under the condition that he returns that loan at a specific time and he gives me a loan of the same amount for the same period of time as the first period? Is this included under the Hadith:
"Every loan that brings some benefit (to the lender) is Riba."

This is while knowing that requesting some increase has not been stipulated.

Please benefit us with an answer. May Allâh reward you with good.

Answer:

This loan is not permissible because it contains the stipulation of a similar loan to be given to the lender, and that is considered a contract within a contract, which has the same ruling as two sales in one. It is also not permissible because he stipulated a condition of some increased benefit on top of the simple loan, which was that the borrower would loan him a similar loan. Indeed the scholars have come to a consensus that every loan that contains a condition of increased benefit or an understood agreement for it, then it is Riba. In reference to the Hadith:
"Every loan that brings some benefit (to the lender) is Riba."This is a weak Hadith. However, that which alludes to its same meaning has been reported from a group of the Companions. if that benefit is stipulated as a condition or if has the ruling of a stipulation or debt.

Source:
Ash-Shaykh Ibn Baz
Fatawa Islamiyah, Vol. 3 Pages 426-427