There is a cooperative in which its members participate on the condition that only the contributors may take from it. A person joined it on the condition that he would borrow from it. What is the ruling on this transaction?
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The questioner : In the name of Allah, the Most Gracious, the Most Merciful.
There is a cooperative where each person pays 200 riyals. The condition of this cooperative is that only the contributors may borrow from it. There is a man who wants to join this cooperative on the condition that he will borrow from it. Is there any riba (usury or interest) in this?
The Shaykh : It appears that there is something wrong with it. Why? Because he is paying this amount of two hundred in order for his brothers to lend it to him. If he conditions that they lend it to him, he will condition that they lend him more than the two hundred. Therefore, it is not permissible.
There is a cooperative where each person pays 200 riyals. The condition of this cooperative is that only the contributors may borrow from it. There is a man who wants to join this cooperative on the condition that he will borrow from it. Is there any riba (usury or interest) in this?
The Shaykh : It appears that there is something wrong with it. Why? Because he is paying this amount of two hundred in order for his brothers to lend it to him. If he conditions that they lend it to him, he will condition that they lend him more than the two hundred. Therefore, it is not permissible.