Industrial Bank Loans
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Fatwa No. ( 2664 ):
Q: I would like to inform your Eminence that I applied to the Saudi Industrial Development Bank for a loan to establish a printing project. The bank's policy is to impose 2% (two percent) of the loan amount on the borrower, and the loan is deferred for a period of seven years. Since this involves a doubt, and I wish to avoid sources of doubt, I negotiated with the Industrial Bank on a method that avoids the doubt. That is, the bank estimates the costs of those who will study the project from all aspects—construction, electrical, and technical—as well as those who will travel to Germany to verify the prices of the machines we submitted to them, and to visit the companies from which we received offers for ready-made buildings to verify the prices as well. The Industrial Bank estimated the costs of all these works at approximately 60,000 riyals. We agreed that I would pay this amount in advance. Once the study and its related matters, as mentioned above, are completed, the bank will calculate all its actual costs and return any excess amount if it is more, or request us to pay the additional costs that exceeded the aforementioned amount. After the study is complete and the final decision is prepared, the loan contract is written, stating the loan amount, and it will not contain any percentage, whether 2% or otherwise. I also inform your Eminence that the loan amount to be determined is approximately five million riyals, which the bank will collect in installments over a period of seven years.
I ask your eminence to kindly issue a fatwa on this matter, hoping that the Lord, Mighty and Majestic, will guide you to the truth.
A: If the matter is as mentioned, it is permissible to deal with the bank, and the amount you pay to it does not contain riba. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his companions.
Q: I would like to inform your Eminence that I applied to the Saudi Industrial Development Bank for a loan to establish a printing project. The bank's policy is to impose 2% (two percent) of the loan amount on the borrower, and the loan is deferred for a period of seven years. Since this involves a doubt, and I wish to avoid sources of doubt, I negotiated with the Industrial Bank on a method that avoids the doubt. That is, the bank estimates the costs of those who will study the project from all aspects—construction, electrical, and technical—as well as those who will travel to Germany to verify the prices of the machines we submitted to them, and to visit the companies from which we received offers for ready-made buildings to verify the prices as well. The Industrial Bank estimated the costs of all these works at approximately 60,000 riyals. We agreed that I would pay this amount in advance. Once the study and its related matters, as mentioned above, are completed, the bank will calculate all its actual costs and return any excess amount if it is more, or request us to pay the additional costs that exceeded the aforementioned amount. After the study is complete and the final decision is prepared, the loan contract is written, stating the loan amount, and it will not contain any percentage, whether 2% or otherwise. I also inform your Eminence that the loan amount to be determined is approximately five million riyals, which the bank will collect in installments over a period of seven years.
I ask your eminence to kindly issue a fatwa on this matter, hoping that the Lord, Mighty and Majestic, will guide you to the truth.
A: If the matter is as mentioned, it is permissible to deal with the bank, and the amount you pay to it does not contain riba. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his companions.
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.