Banking: Using a Loan for Purposes Other Than the One Originally Intended

Practical Laws of Islam as per the teachings of Imam Khamenei

Banking: Using a Loan for Purposes Other Than the One Originally Intended

English:

Question #1920:

A person took a sum of money from the bank for a certain purpose. However, they did not actually mean to use in that avenue, but spent it in a different one. They might as well have changed their mind and spent the money for some other more pressing need. What is the ruling in this matter?

Answer #1920:

If giving the money by the bank and its receiving by the customer was done by way of loan, it is correct. The borrowed money should be the property of the borrower who is, therefore, free to spend it in any avenue they wished, albeit it is obligatory on them, as a matter of religious duty, to abide by the condition, if it was stipulated, that they should spend the money in a particular avenue. Yet, if giving the money by the bank and its receiving by the customer was under the title of partnership/silent partnership, for example, the contract is not sound if it was nominal. Accordingly, the money would still be the property of the bank and the recipient should have no right to use. Moreover, if they were serious in concluding the contract under which they got money from the bank, the money is considered as trust and it is not permissible to use it in an avenue not stipulated in the contract.

-Imam Khamenei, Practical Laws of Islam, Importance and Conditions of Banking