Date : 09-09-2012

Question :

What is the ruling on taking a loan from some parties although they deduct 50Jd as administrative fees?

The Answer :

All perfect praise be to Allah, The Lord of The Worlds, and may His peace and blessings be upon our Prophet Muhammad and upon all of his family and companions.

We already have clarified the ruling for the administrative fees imposed on some types of loans as well we mentioned that it is permissible if they were meant to cover the expenses of the employees working on receiving and tracking the status of installment payments without any interest, as been clarified in Fatwa No. (550).

However, imposing the aforementioned fees is prohibited if they included any additional sum, and calling them administrative fees won’t change their usurious nature.

In addition, we (Iftaa’ Dept.) are unable to identify whether the 50Jd is the actual cost of employees’ services or an additional interest; therefore, we advise people to inquire from people who are in charge on the aforementioned loans; consequently, the Sharia ruling is to be clarified based on the latter’s estimation. And Allah knows best.