Borrowing from the Employee Loan Fund
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Fatwa No. ( 18544 )
Q: The United Company for Eastern Electricity (SECOCO) has established a loan fund project to lend to its employees. This loan ranges from one to six months' salary, with a maximum limit of sixty thousand riyals. It is repaid in monthly installments deducted from the borrowing employee's monthly salary, without interest. However, one cannot obtain the loan unless they subscribe to another fund project, namely the "Cooperative Fund," by deducting twenty riyals monthly from the borrowing employee's salary. This is a mandatory condition for obtaining the loan from the loan fund. We inform you that the goal of the Cooperative Fund is to assist employees in cases of marriage, Ramadan assistance, paying off debts, or if a disaster befalls one of the employees subscribed to the Cooperative Fund. We also inform you that when an employee obtains a loan, one hundred riyals or slightly more, depending on the employee's salary, is deducted from his salary permanently on a monthly basis until the end of service or retirement. In the case of retirement or end of service, the one hundred riyals deducted over this entire period is returned to him. As for the twenty riyals mentioned, they are not refunded, whether the employee borrows from the fund or not. Among the conditions, before giving the employee the loan: half of the basic salary is deducted, distributed over twelve months. After completing the period, which is (12 months), and the twenty riyals—which, as I mentioned, are deducted until the end of service—and likewise the (100 riyals) one hundred riyals, the employee can obtain a loan from the loan fund, not exceeding six months' salary or sixty thousand riyals. Therefore, I ask your eminence to issue a fatwa on the following: A. What is the ruling on borrowing from the loan fund if their condition is the deduction of twenty riyals, and if the goal of the Cooperative Fund is
The employee who borrows, and this is considered a mandatory condition to obtain a loan from the loan fund. I inform you that the objective of the cooperative fund is to assist employees in cases of marriage, Ramadan assistance, paying off debts, or if a disaster befalls one of the employees participating in the cooperative fund. We also inform you that when an employee obtains a loan, one hundred riyals or slightly more is deducted from his salary, depending on the employee's salary, on a permanent monthly basis until the end of service or retirement. In the case of retirement or end of service, the one hundred riyals deducted throughout this period are returned to him. As for the twenty riyals mentioned, they are not refunded, whether the employee borrowed from the fund or not. Among the conditions, before giving the employee the loan: half of the basic salary is deducted, distributed over twelve months. After completing the period, which is (12 months), and deducting the twenty riyals, which as I mentioned are deducted until the end of service, and likewise the (100 riyals) one hundred riyals, the employee can obtain a loan from the loan fund, not exceeding six salaries or sixty thousand riyals. Therefore, I ask your eminence to issue a fatwa on the following: A- What is the ruling on borrowing from the loan fund if their condition is the deduction of twenty riyals, and if the objective of the cooperative fund is
for the benefit of employees for marriage assistance, Ramadan assistance, if a disaster befalls one of the employees participating in it, as I mentioned to you in the text of the question? B- What is the ruling on deducting (100 riyals) or more from the borrowing employee, which continues until the end of service, and then is returned to him upon retirement, and these funds were throughout this period in riba banks at the company? Also, the half of the salary that was deducted over (12 months) is also returned to the employee upon retirement?
A: If the matter is as mentioned, then this borrowing is not permissible; because the lender conditions taking an increase over the loan, which are the amounts mentioned. It was narrated from the Prophet (peace and blessings be upon him) that he said:, and the scholars have agreed upon that. And success is from Allah, and may Allah send prayers and blessings upon our Prophet Muhammad, his family, and his companions.
Q: The United Company for Eastern Electricity (SECOCO) has established a loan fund project to lend to its employees. This loan ranges from one to six months' salary, with a maximum limit of sixty thousand riyals. It is repaid in monthly installments deducted from the borrowing employee's monthly salary, without interest. However, one cannot obtain the loan unless they subscribe to another fund project, namely the "Cooperative Fund," by deducting twenty riyals monthly from the borrowing employee's salary. This is a mandatory condition for obtaining the loan from the loan fund. We inform you that the goal of the Cooperative Fund is to assist employees in cases of marriage, Ramadan assistance, paying off debts, or if a disaster befalls one of the employees subscribed to the Cooperative Fund. We also inform you that when an employee obtains a loan, one hundred riyals or slightly more, depending on the employee's salary, is deducted from his salary permanently on a monthly basis until the end of service or retirement. In the case of retirement or end of service, the one hundred riyals deducted over this entire period is returned to him. As for the twenty riyals mentioned, they are not refunded, whether the employee borrows from the fund or not. Among the conditions, before giving the employee the loan: half of the basic salary is deducted, distributed over twelve months. After completing the period, which is (12 months), and the twenty riyals—which, as I mentioned, are deducted until the end of service—and likewise the (100 riyals) one hundred riyals, the employee can obtain a loan from the loan fund, not exceeding six months' salary or sixty thousand riyals. Therefore, I ask your eminence to issue a fatwa on the following: A. What is the ruling on borrowing from the loan fund if their condition is the deduction of twenty riyals, and if the goal of the Cooperative Fund is
The employee who borrows, and this is considered a mandatory condition to obtain a loan from the loan fund. I inform you that the objective of the cooperative fund is to assist employees in cases of marriage, Ramadan assistance, paying off debts, or if a disaster befalls one of the employees participating in the cooperative fund. We also inform you that when an employee obtains a loan, one hundred riyals or slightly more is deducted from his salary, depending on the employee's salary, on a permanent monthly basis until the end of service or retirement. In the case of retirement or end of service, the one hundred riyals deducted throughout this period are returned to him. As for the twenty riyals mentioned, they are not refunded, whether the employee borrowed from the fund or not. Among the conditions, before giving the employee the loan: half of the basic salary is deducted, distributed over twelve months. After completing the period, which is (12 months), and deducting the twenty riyals, which as I mentioned are deducted until the end of service, and likewise the (100 riyals) one hundred riyals, the employee can obtain a loan from the loan fund, not exceeding six salaries or sixty thousand riyals. Therefore, I ask your eminence to issue a fatwa on the following: A- What is the ruling on borrowing from the loan fund if their condition is the deduction of twenty riyals, and if the objective of the cooperative fund is
for the benefit of employees for marriage assistance, Ramadan assistance, if a disaster befalls one of the employees participating in it, as I mentioned to you in the text of the question? B- What is the ruling on deducting (100 riyals) or more from the borrowing employee, which continues until the end of service, and then is returned to him upon retirement, and these funds were throughout this period in riba banks at the company? Also, the half of the salary that was deducted over (12 months) is also returned to the employee upon retirement?
A: If the matter is as mentioned, then this borrowing is not permissible; because the lender conditions taking an increase over the loan, which are the amounts mentioned. It was narrated from the Prophet (peace and blessings be upon him) that he said:
Every loan that brings a benefit is riba
كل قرض جر نفعًا فهو ربًا
Source
www.alifta.gov.sa
The Arabic text is copied verbatim from the original source, without any edits.