The Prohibition of Interest-Based Loans

Your Eminence! This is a message received from listener (A. A. S.) asking about the increase in bank loans. He says: May the peace, mercy, and blessings of Allah be upon you! I am informing you of an important matter that concerns Islamic creed: when a person wants to borrow from the banks, they demand a specific increase upon repayment of the loan. They also require the borrower to pledge the deed, and the pledge of the deed is not completed without the approval of the court or the Office of Notary. The question is: Is it permissible for the bank to require a specific increase from the borrower? And is it permissible for the court or the Office of Notary to approve the pledge of the deed to the bank, knowing that this borrowing involves an interest-based transaction? Please advise the people and the owners of the banks in this regard, and I ask for an answer to my question. May Allah guide you.
Answer: In the name of Allah, the Most Gracious, the Most Merciful.
Praise be to Allah, and may Allah send prayers and peace upon His Messenger, and upon his family and his Companions, and upon those who follow his guidance. As for what follows:
This loan about which the questioner asked is forbidden without doubt, and its prohibition is a matter of consensus among the scholars; because the increase in a loan is interest without doubt according to the scholars. Therefore, it is not permissible for a Muslim to borrow from any person, whether from a bank or other than a bank, with an increase upon repayment. For example, borrowing one hundred with the condition of returning one hundred and ten, or one hundred and five, or one hundred and one riyal; all of that is interest. Likewise, borrowing one thousand with the condition of returning one thousand and five, or one thousand and ten, or one thousand and twenty; all of that is interest. It is not permissible for a Muslim to engage in this, neither from a bank nor from other than a bank, neither with individuals nor with groups; it is all evil. We have written about this more than once, and it has been published in local newspapers and others, so the matter is clear. But many people proceed to interest without caring, preferring the immediate over the deferred, and not caring about the matter of Allah (Glorified and Exalted is He). If the court knows this matter, it is not permissible for them to approve it, nor is it permissible for them to approve the confirmation of the deed; because this is a case of assisting in interest. But as far as I have heard, the courts do not know about this; because they generalize the increase in the loan and claim that they have a right to so-and-so, and they include the increase in the loan, so the judge does not know the truth, and he writes for them a specific debt in which the known increase is not mentioned.
So the result is: if the judge knows this, or the notary, it is not permissible for him to certify this debt that contains interest. But they may obscure it and hide it and not clarify it, so the notary or the judge writes the certification; because he does not know the truth, and one who is ignorant is excused. Yes.