Date : 04-05-2014

Question :

The syndicate of nurses and midwives grants its members investment and goodwill loans where (4%) is added to the investment loan, then (3%) is added as administrative expenses to both loans ?

The Answer :

All praise is due to Allah, peace and blessings be upon the Messenger of Allah and upon all his family and companions: It is permissible to charge the loanee the actual fees of the loan services such as paperwork and wages of employees entrusted with loan repayment…etc. This is provided that the paid sum equals the actual fees of the loan services without adding any profit since any increase is usury(Riba) As the Hanafite scholars stipulated, the paperwork fees are to be collected from the loanee . The Jordanian Iftaa` Board permitted this in its resolution No.(72) provided that the deducted sum is not a percentage, but rather a specific amount. The Assembly of Islamic Fiqh issued the resolution No.13(1/3) which reads: “First, it is permissible to charge fees on loan services provided that they are part of the actual expenses. Second, every increase over the actual expenses is forbidden because it is a sort of Riba.” The investment loans are called ‘Morabaha’ (a contract in which a party asks another to buy an item in cash, then resell it to it in payments with an agreed profit),which is permissible in Islam in case its legal requirements were met. Adding (3%) in exchange of expenses is not permissible since such transaction usually involves employees, effort, and remuneration for costs. The syndicate has the right to claim (4%) as a Morabaha, and it should be noted that calling it a loan is a kind of cheating and it had better be called ‘Morabaha’. And Allah knows best.