How to repay a debt if the currency has changed in value
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Your Eminence! One of the brothers borrowed a sum of money from a neighbor who owns a store in his town. Ten years have passed since this debt, and he wants to repay the amount now. However, the country's currency has dropped to the point where the amount, which at the time could buy, for example, a new car from the agency, cannot today buy even one of its tires. So, should he return the same amount, in which case the creditor would have lost a great deal, or should he pay him what is equivalent to the value of the amount ten years ago? And would that constitute riba?
If the money has been abolished and replaced by another currency, he may demand its value at that time or its value when it was abolished. But if the currency remains as it is, the lender is entitled only to this currency, whether it increases or decreases.And I tell you: Suppose the currency increased; would the lender not demand it from the borrower? Yes, he demands it from him, even though it may have increased many times over. Likewise, if he lent him a sa' of wheat a few years ago, and the sa' was worth five riyals, then it dropped to two riyals, for example, would he say, "Give him the sa' and give him three riyals"? No, he is entitled only to the sa'. For like-for-like items, only the return of the like is required. Likewise, currency, unless the transaction with it is abolished, in which case he is entitled to its value at the time of its abolition.
The questioner: The borrower sees that it is increasing. Is there riba in this?The Shaykh: No, if he volunteers and gives him an increase. For the best of people are those who are best in repaying their debts. The Prophet (peace and blessings be upon him) borrowed a camel and returned a superior four-year-old camel, and he said: "The best of you are those who are best in repaying their debts".
If the money has been abolished and replaced by another currency, he may demand its value at that time or its value when it was abolished. But if the currency remains as it is, the lender is entitled only to this currency, whether it increases or decreases.And I tell you: Suppose the currency increased; would the lender not demand it from the borrower? Yes, he demands it from him, even though it may have increased many times over. Likewise, if he lent him a sa' of wheat a few years ago, and the sa' was worth five riyals, then it dropped to two riyals, for example, would he say, "Give him the sa' and give him three riyals"? No, he is entitled only to the sa'. For like-for-like items, only the return of the like is required. Likewise, currency, unless the transaction with it is abolished, in which case he is entitled to its value at the time of its abolition.
The questioner: The borrower sees that it is increasing. Is there riba in this?The Shaykh: No, if he volunteers and gives him an increase. For the best of people are those who are best in repaying their debts. The Prophet (peace and blessings be upon him) borrowed a camel and returned a superior four-year-old camel, and he said: "The best of you are those who are best in repaying their debts".