The Ruling on Cooperative Associations Among Employees

Question:
A questioner says: I heard a fatwa from you, Honorable Shaykh, regarding the cooperative associations established among employees or teachers, stating that they are riba (usury or interest). I ask you, Honorable Shaykh, to clarify and substantiate this issue.

Answer:
This is a written matter that I have written and it is found in my works. This is a loan that yields a benefit; he lends to his colleagues on the condition that they lend to him. So, if a loan yields a benefit, it is riba. This is mutual lending, where some lend to others on the condition that they lend to them, saying: "We will pool the funds, and one person will take it, and in the second round the second person will take it, and so on, rotating among them." This is a conditional loan, or riba. It is two contracts in one, or two sales in one. This is my opinion on it. Yes.

The presenter:
May Allah reward you, Honorable Shaykh,