Fatwa on Permission to Take Interest-Bearing Loans to Meet Essential Life Needs

MINA published the integral text of the Fatwa by the Council of Muftis on the permission to take interest-bearing loans to meet essential life needs.

The Muslim Information News Agency is publishing the integral text due to, as they state, the great interest and even misinterpretations of this fatwa in parts of the Bosnian public:

“It is widely known that Islam strictly prohibits interest. The Quran states: ‘And Allah has permitted trade and has forbidden interest.’ (Al-Baqara, 275.) This is prescribed because wealthy people exploit the poor through interest. Interest devalues human labor and is based on the erroneous perception that money is an end in itself, not a means,” the fatwa states.

It further states:

“Classical Islamic jurists have stated that whoever engages in interest-based transactions has committed ‘kufr al-niʻma’ (an act of ingratitude for Allah’s bounty, which is a great sin) and injustice (zulm), because money is a means to satisfy certain goals/benefits, and not an end in itself. If money becomes an object of trade, then it becomes an end in itself, which is not the intention of the Lawgiver. Therefore, the sole purpose of selling money for money is its accumulation, which is unjust. Muslims are obliged to follow Islamic regulations and strive to promote universal Islamic values upon which the ordering of socio-economic relations among people should be based, and which guarantee justice, mutual solidarity, and the avoidance of conflict and wars.

Muslim scholars in the past century have provided reasoned answers to contemporary fiqh questions related to banks and their interest-based operations. One of these is the issue of saving in banks and the disposal of interest earned from it. This question was posed by entrepreneurs who had a real need to keep their money safe. The answer of the aforementioned scholars, as well as their legal reasoning, is well-known, according to which the profit earned from interest-bearing savings must be spent for charitable purposes, and never for one’s own needs.

Mustafa Zerka, a renowned expert on legal rules within the science of fiqh, explained this position with well-known fiqh rules: Necessity changes the law, and Need has the force of necessity, both public and private. In other words, in situations of necessity or need, it is permissible to borrow money from a bank that operates with interest, with the note that the prohibition of interest remains in effect.

In addition to businessmen who need to keep their money safe, there is a much larger number of people who need to solve their housing issues and other essential needs. Given that the aforementioned Sharia and fiqh rules are based on numerous legislative texts from the Quran and Hadith, their Sharia or legal force is thus greater and more significant. This issue is also supported by other Sharia rules, which speak of hardship and harm: Harm must be removed, Hardship necessitates ease, and Hardship is removed. 

Bearing in mind all that has been stated, following the Quranic principle: ‘He has chosen you and has not imposed any hardship on you in religion’ (Al-Ḥağğ, 78.), and ‘Allah wants to make it easy for you, and He wants to make it difficult for you’ (Al-Baqara, 185.), adhering to the guidance of the Noble Prophet who said: ‘Make things easy and do not make them difficult’ (muttefekun alejh) and invoking the aforementioned Sharia and fiqh rules, the Council of Muftis of the Islamic Community in Bosnia and Herzegovina adopts a fiqh position according to which the use of interest-bearing loans is permissible in situations of necessity and real life needs, with the note to Muslims that they are obliged to adhere to the framework of necessity and real life needs, and to use this facilitation for what is halal, permissible, and beneficial. The Council of Muftis confirms that this fatwa does not approve of interest-based transactions (giving interest-bearing loans and usury), but only taking interest-bearing loans in cases of necessity.

If there is a possibility to resolve the financing of the aforementioned needs based on interest-free transactions, there is no justification for taking interest-bearing loans, because in that case, necessity does not exist. And Allah knows best”!

The fatwa is signed by the Reis-ul-ulema of the Islamic Community in Bosnia and Herzegovina, Husein ef. Kavazović