The Ruling on Group Loans Among Colleagues

Question:
We are colleagues who participate in a monthly association of one thousand riyals each. We collect it and give it to one of us, and so on. What is the ruling on this practice? Is it lawful, or is there something wrong with it? This year, through collective lending, a study was conducted two or three years ago, and the scholars differ on it.

Answer:
Some of them permitted it because it benefits all parties and provides a shared benefit by facilitating things for those in need. Some scholars held back on it, and some forbade it, saying: This is not permissible because it is a loan that brings benefit. You lent to your colleagues on the condition that they lend to you when your turn comes, so this is a conditional loan within a loan, which is a sale within a sale. It is also a loan that brings benefit. Every loan that brings benefit and harm is problematic. The expectation for Muslims is that if one of them needs something, they lend to him without this arrangement and without this organization. The one who needs a loan borrows from his brother or his brothers without this commitment. Suppose one person takes these funds, takes these funds, and bears the debts of his colleagues, then he loses his job, loses his job, or the rights of his colleagues are lost. This involves some risks, in addition to the fact that, as we mentioned, it is a loan that brings benefit and a conditional loan within a loan, which has many precautions. The known view is that the Qur'an made things easy for Allah without this method. A person needs to approach his brothers or one of his brothers without these organizations that may cause difficulty in the future.