The Ruling on the Teachers' Association's Collective Loan

Question:
There is an association called the Teachers' Association, where a teacher pays a specific amount to his father, and so on for everyone. I did not understand what the scholars meant, and what its meaning is: is it every student in Baghdad, or Baghdad itself?

Answer:
I have said on more than one occasion that this is not permissible, because it is a loan that yields a benefit. Every loan that yields a benefit is riba (usury or interest), because he did not lend to his colleagues except on the condition that they lend to him, so this is a condition for benefit. Also, it consists of two contracts: a loan contract conditioned by a loan contract, so it contains the meaning of two sales in one sale, which is prohibited. So I hold that this is not permissible. Whoever wants to borrow should go to one of his brothers and borrow from him, or resort to something prescribed, such as a salam (forward sale) contract, praise be to Allah, or borrow through the method of al-gha'ibah, because it is valid according to the majority. He buys a commodity at a deferred price, then sells it in the market at a spot price, and disposes of the price to pay off what is due to him or to settle his debt, or to buy his necessities. The debt and al-gha'ibah are permissible according to the majority due to the need for them. As for the group loan, in my view, it is not permissible. Yes.