Debt and Loan: Ruling on Conditional Deposits for Eligibility to Receive Loans

Practical Laws of Islam as per the teachings of Imam Khamenei

Debt and Loan: Ruling on Conditional Deposits for Eligibility to Receive Loans

English:

Question #1772:

A fund gives out loans on the condition that the member deposits a certain amount of money in the fund where it has to be left for three to six months. At the end of this period, the member can take a loan up to double the amount he deposited. After the member pays off the debt, his money is returned to him. What is your view?

Answer #1772:

If depositing the money in the fund was under the title of loan for a particular period, on the condition that the fund grants him the loan, or lending him some money was made conditional on his depositing a certain amount of money with the fund, this condition amounts to ribā and is, therefore, ḥarām and invalid. However, the very loan deed is valid for both parties.

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