The Difference Between the Permissible Loan and the Forbidden Loan
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Question:
This questioner says: In dealings, O Shaykh, with banks, what is the difference between a loan and bank financing? And what is the established and most correct ruling that the Shari'ah has defined to make it permissible in this matter?
Answer:
What the Shari'ah has defined is that no increase is taken on a loan, because it is a contract of assistance and kindness to the needy. If it is free from increase, there is reward in it. As for a loan with a stipulated increase, this is riba (usury or interest). The Prophet (peace and blessings be upon him) said:Bulugh al-Maram 7:99 This is by the consensus of the scholars. That the investment loan is explicit riba and forbidden, and it is not permissible, neither in banks nor elsewhere. Yes.
This questioner says: In dealings, O Shaykh, with banks, what is the difference between a loan and bank financing? And what is the established and most correct ruling that the Shari'ah has defined to make it permissible in this matter?
Answer:
What the Shari'ah has defined is that no increase is taken on a loan, because it is a contract of assistance and kindness to the needy. If it is free from increase, there is reward in it. As for a loan with a stipulated increase, this is riba (usury or interest). The Prophet (peace and blessings be upon him) said:
Every loan, which leads to a benefit, is usury.
كُلُّ قَرْضٍ جَرَّ مَنْفَعَةً فَهُوَ رِبًا
Source
قناة «العلامة الدكتور صالح الفوزان»، 1492 - الفرق بين القرض الجائز والقرض المحرم - الشيخ صالح الفوزان — youtube.com
The Arabic text is a machine transcription of the audio recording.