The Ruling on Loans for Which the State Takes Interest in Case of Delayed Repayment
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Question:
May Allah reward you, Honorable Shaykh. This questioner says: In our country, the state gives out loans, and if the borrower does not repay within the specified period, the state takes five percent interest from him. Some students of knowledge among us have issued a ruling that these loans are permissible. The question is: Is this ruling correct, or is this interest riba (usury or interest)?
Answer:
No one doubts that this is riba. The increase on a debt when there is delay is riba. This is the riba of the pre-Islamic age of ignorance (jahiliyyah), the most severe form of riba, riba al-nasi'ah (usury of deferment). This is the most severe riba. We ask Allah for safety. No student of knowledge issues a ruling like this unless he is a pretender to knowledge, or perhaps a misguided scholar. Yes.
May Allah reward you, Honorable Shaykh. This questioner says: In our country, the state gives out loans, and if the borrower does not repay within the specified period, the state takes five percent interest from him. Some students of knowledge among us have issued a ruling that these loans are permissible. The question is: Is this ruling correct, or is this interest riba (usury or interest)?
Answer:
No one doubts that this is riba. The increase on a debt when there is delay is riba. This is the riba of the pre-Islamic age of ignorance (jahiliyyah), the most severe form of riba, riba al-nasi'ah (usury of deferment). This is the most severe riba. We ask Allah for safety. No student of knowledge issues a ruling like this unless he is a pretender to knowledge, or perhaps a misguided scholar. Yes.
Source
قناة «العلامة الدكتور صالح الفوزان»، [3436/2649] حكم القروض التي تأخذ عليها الدولة فوائد عند التأخر في السداد - الشيخ صالح الفوزان — youtube.com
The Arabic text is a machine transcription of the audio recording.