Question :

What is the ruling of Sharia on imposing a recurring fine on a certain sum, for example when a member fails to pay a hundred dinars to an association, and is to be fined a JD for each month of delay? Note: An association {Jame`iah} here means: when ten people for example agree on paying a hundred dinars by each monthly, and over a period of ten months, where a thousand JDs are given to one of them at the end of every month according to his/her turn.

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.

A loan is a contract of benevolence and aid legislated by Allah, The Almighty, to make things easy for people; therefore, we call on the above person to adhere to making payments on their due time, and not to give priority to personal expenditure over that. Imposing fines on the debtor against delay in payment violates the rules of Islamic Sharia, for Allah, The Almighty, Says {what means}: “If the debtor is in a difficulty, grant him time Till it is easy for him to repay. But if ye remit it by way of charity, that is best for you if ye only knew.” {Al-Baqarah/280}.

The creditor has the right to claim the debt through lawful means since imposing delay fines on the debtor is forbidden. Resolution No.(124) by the Board of Iftaa`, Research and Islamic Studies states: “ Granting the creditor the right of receiving a compensation and claiming it upon the debtor`s failure to make payment on the set time renders the contract invalid since this is considered from the pre-Islamic usury, which has been forbidden by the Quran. Allah, The Exalted, says{what means}: “but God hath permitted trade and forbidden usury “ {Al-Baqarah/275}.