Debt and Loan: Legitimacy of Using Depositors’ Funds to Repay Loans and Ownership of Purchased Property

Practical Laws of Islam as per the teachings of Imam Khamenei

Debt and Loan: Legitimacy of Using Depositors’ Funds to Repay Loans and Ownership of Purchased Property

English:

Question #1770:

The administrative committee of a ribā-free loan institution bought property with money borrowed from a person. A month later, the institution paid back the loan with money deposited in its trust by other people without their permission. Is this transaction shar‘ī? And to whom should the ownership of the property belong?

Answer #1770:

There is no harm in purchasing the property with the money lent to the institution if the members of its administrative committee were going about their business according to their brief. Thus, the purchased property should be in the ownership of the institution and its shareholders. Yet, they must return the money they used without the consent of their owners plus its inflation.

-Imam Khamenei, Practical Laws of Islam, Importance and Conditions of Debt and Loan