What is the ruling when a person borrows money and, at the time of repayment, the value of the currency has fallen?
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The questioner : One of the brothers asks: A man borrowed one hundred Syrian pounds from another, and when the time for repayment came, the value of the currency had fallen. What is he obligated to repay according to the Shari'ah?
The Shaykh : There must be at least a mutual agreement between the creditor and the debtor; because it is not valid in terms of Islamic justice—and I do not mean social justice—it is not valid in any way for the borrower to repay the hundred as a hundred, when the hundred has become one and less. If he wants justice, he must pay what is equivalent to the value of the hundred dinars on the day he received them as a good loan.
The questioner : That is, three-quarters of a pound became a quarter of a pound; it fell, meaning.
Another questioner : By mutual agreement, meaning.
The Shaykh : How did a quarter of a pound fall?
The questioner : That is, the hundred pounds became seventy-five pounds, meaning a slight drop.
The Shaykh : Depending on the drop; now the Syrian pound has become less than a pound.
The questioner : We say that the drop is slight, so it became seventy pounds.
The Shaykh : As long as the drop is apparent, the ruling is what you heard. If the drop is an apparent drop, not an accounting to the millime, no. The discussion holds, and everything is according to its measure. Are you not pointing to this point?
The questioner: Yes.
The Shaykh : That is it.
The questioner : How should the measure be? On gold, or on...
The Shaykh : On the effective value of the currency. For example, if you had one hundred Syrian pounds, you could buy a tin of ghee with them. Now, you need hundreds to buy a tin of ghee. So, if we assume that on the day I borrowed one hundred Syrian pounds from you, I was able to buy a tin of local ghee with that hundred, then at the time of repayment, what I am going to give you must allow you to buy a tin of ghee. And when I say this, I naturally feel that it is not easy to convince the Syrian debtor of this difference. Therefore, my answer was that there must be a mutual agreement, meaning one person gives up a little from the hundred, and the other lowers what he owes, and so on until they reach an agreement and reconcile. But, by Allah, there are people who say, "I took a hundred from you, this is a hundred, and that is why we say that a time may come when this currency is completely invalidated, as happened with the German mark during the World War, when millions of marks accumulated with the big merchants and became invalid. If one person took one thousand German marks from another, and when its value went down, if he handed him one thousand German marks, he has certainly wronged him, because he did not fulfill his right. Do you have anything?
The questioner : Okay, what if the currency appreciates?
The Shaykh : Again, again.
The questioner : Again, they reach a mutual agreement.
The Shaykh: It is known.
Al-Halabi : Our Shaykh, with respect, meaning the basis is the value, not the quantity of money?
The Shaykh : You have already received the answer just now. If the entire currency is invalidated, what does he give? Let us stay here at this point: if the currency is invalidated, what does the debtor pay?
The questioner : The value, of course.
The Shaykh : What value?
The questioner : I mean he does not pay anything, but he remains indebted by the value, is that not so, sir?
The Shaykh : Spare me and spare yourself with me. Answer my question: what does the debtor pay?
The questioner : There is nothing wrong with it.
The Shaykh : How can it be nothing? Meaning, is his liability cleared?
The questioner : No, there is nothing he pays.
Another questioner : The equivalent of the amount at the time of borrowing.
The questioner : I told him the value.
The Shaykh : The value, my brother, is said in relation to the currency. What do you mean by the value of the currency?
The questioner : The purchasing power at that time.
The Shaykh : Yes, the purchasing power, and we spoke about this just now. So after all this talk, what remains of your question?
The questioner : I say that the basis in answering this question is the purchasing power, not that the basis is a hundred dinars for a hundred dinars, or a hundred pounds for a hundred pounds.
The Shaykh : When the value of the currency falls.
The questioner : Give an example; perhaps the issue will become clearer than that. A man took one thousand Syrian pounds from another. This thousand was equal to one hundred Jordanian dinars when it was taken. When the time for repayment came, it was equal to fifty Jordanian dinars.
The Shaykh : He has to pay one hundred Jordanian dinars.
The questioner : Yes, he has to pay one hundred Jordanian dinars.
Al-Halabi : Okay, is it not said here, our Shaykh, that mutual agreement...
The Shaykh : Everything requires a mutual agreement.
The questioner : This is what I wanted to say, because once I asked you in your house, and there was a right between me and an Egyptian brother regarding the Jordanian dinar and the Egyptian pound, and you told me by mutual agreement: the first lowers from his right, and the second raises what he owes.
Another questioner : Is that correct? The first lowers from his right, and the second raises what he owes?
The Shaykh : The intent is understood; the wording is understood.
The Shaykh : There must be at least a mutual agreement between the creditor and the debtor; because it is not valid in terms of Islamic justice—and I do not mean social justice—it is not valid in any way for the borrower to repay the hundred as a hundred, when the hundred has become one and less. If he wants justice, he must pay what is equivalent to the value of the hundred dinars on the day he received them as a good loan.
The questioner : That is, three-quarters of a pound became a quarter of a pound; it fell, meaning.
Another questioner : By mutual agreement, meaning.
The Shaykh : How did a quarter of a pound fall?
The questioner : That is, the hundred pounds became seventy-five pounds, meaning a slight drop.
The Shaykh : Depending on the drop; now the Syrian pound has become less than a pound.
The questioner : We say that the drop is slight, so it became seventy pounds.
The Shaykh : As long as the drop is apparent, the ruling is what you heard. If the drop is an apparent drop, not an accounting to the millime, no. The discussion holds, and everything is according to its measure. Are you not pointing to this point?
The questioner: Yes.
The Shaykh : That is it.
The questioner : How should the measure be? On gold, or on...
The Shaykh : On the effective value of the currency. For example, if you had one hundred Syrian pounds, you could buy a tin of ghee with them. Now, you need hundreds to buy a tin of ghee. So, if we assume that on the day I borrowed one hundred Syrian pounds from you, I was able to buy a tin of local ghee with that hundred, then at the time of repayment, what I am going to give you must allow you to buy a tin of ghee. And when I say this, I naturally feel that it is not easy to convince the Syrian debtor of this difference. Therefore, my answer was that there must be a mutual agreement, meaning one person gives up a little from the hundred, and the other lowers what he owes, and so on until they reach an agreement and reconcile. But, by Allah, there are people who say, "I took a hundred from you, this is a hundred, and that is why we say that a time may come when this currency is completely invalidated, as happened with the German mark during the World War, when millions of marks accumulated with the big merchants and became invalid. If one person took one thousand German marks from another, and when its value went down, if he handed him one thousand German marks, he has certainly wronged him, because he did not fulfill his right. Do you have anything?
The questioner : Okay, what if the currency appreciates?
The Shaykh : Again, again.
The questioner : Again, they reach a mutual agreement.
The Shaykh: It is known.
Al-Halabi : Our Shaykh, with respect, meaning the basis is the value, not the quantity of money?
The Shaykh : You have already received the answer just now. If the entire currency is invalidated, what does he give? Let us stay here at this point: if the currency is invalidated, what does the debtor pay?
The questioner : The value, of course.
The Shaykh : What value?
The questioner : I mean he does not pay anything, but he remains indebted by the value, is that not so, sir?
The Shaykh : Spare me and spare yourself with me. Answer my question: what does the debtor pay?
The questioner : There is nothing wrong with it.
The Shaykh : How can it be nothing? Meaning, is his liability cleared?
The questioner : No, there is nothing he pays.
Another questioner : The equivalent of the amount at the time of borrowing.
The questioner : I told him the value.
The Shaykh : The value, my brother, is said in relation to the currency. What do you mean by the value of the currency?
The questioner : The purchasing power at that time.
The Shaykh : Yes, the purchasing power, and we spoke about this just now. So after all this talk, what remains of your question?
The questioner : I say that the basis in answering this question is the purchasing power, not that the basis is a hundred dinars for a hundred dinars, or a hundred pounds for a hundred pounds.
The Shaykh : When the value of the currency falls.
The questioner : Give an example; perhaps the issue will become clearer than that. A man took one thousand Syrian pounds from another. This thousand was equal to one hundred Jordanian dinars when it was taken. When the time for repayment came, it was equal to fifty Jordanian dinars.
The Shaykh : He has to pay one hundred Jordanian dinars.
The questioner : Yes, he has to pay one hundred Jordanian dinars.
Al-Halabi : Okay, is it not said here, our Shaykh, that mutual agreement...
The Shaykh : Everything requires a mutual agreement.
The questioner : This is what I wanted to say, because once I asked you in your house, and there was a right between me and an Egyptian brother regarding the Jordanian dinar and the Egyptian pound, and you told me by mutual agreement: the first lowers from his right, and the second raises what he owes.
Another questioner : Is that correct? The first lowers from his right, and the second raises what he owes?
The Shaykh : The intent is understood; the wording is understood.
Source
www.al-albany.com
The Arabic text is copied verbatim from the original source, without any edits.