Loans that the institution pays to its employees or others, for which it takes profits
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Fatwa number ( 20604 )
Q: We are a group of employees working in a government institution, namely the Social Security Institution. This institution provides financial loans to employees, on the condition that the loan is used to build a residence or purchase a residential plot of land. The institution disburses a large financial loan to the employee, collecting profits in addition to the principal amount, where they call this loan (Islamic Murabaha). I ask Allah the Exalted, and then your Excellency, to be gracious and clarify the Islamic ruling on these loans.
A: If the loans that the aforementioned institution pays to its employees or others are subject to profits, they are forbidden loans; because every loan that yields a benefit is riba (usury or interest), even if it is called by another name.
And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Q: We are a group of employees working in a government institution, namely the Social Security Institution. This institution provides financial loans to employees, on the condition that the loan is used to build a residence or purchase a residential plot of land. The institution disburses a large financial loan to the employee, collecting profits in addition to the principal amount, where they call this loan (Islamic Murabaha). I ask Allah the Exalted, and then your Excellency, to be gracious and clarify the Islamic ruling on these loans.
A: If the loans that the aforementioned institution pays to its employees or others are subject to profits, they are forbidden loans; because every loan that yields a benefit is riba (usury or interest), even if it is called by another name.
And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his Companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.