The Ruling on a Savings Association Among Colleagues

Question:
May Allah reward you, Honorable Shaykh. This questioner says: I and some of my colleagues at work have agreed that each of us will pay two thousand riyals monthly, and then one of us will take it, and so on until each of us receives his share from this association. What is the ruling on this? And is this practice valid?

Answer:
I hold that this is not permissible, and I have said more than once that this is not permissible because it is a conditional loan within a loan. Since you did not lend to your colleagues with the condition that they lend to you, it is a conditional loan within a loan. It is two sales in one sale. Also, it is seeking a benefit. So I hold that this is not permissible on these two points. What is permissible is for one to approach one of his brothers to borrow from him, not to approach a group in this manner. He borrows from one of his brothers and repays the loan when he is able, without resorting to this method.