Debt and Loan: Ruling on Paying or Receiving Monthly “Profits” Without a Shar‘ī Contract

Practical Laws of Islam as per the teachings of Imam Khamenei

Debt and Loan: Ruling on Paying or Receiving Monthly “Profits” Without a Shar‘ī Contract

English:

Question #1768:

Some people borrow an amount of money from others and give them an amount monthly as profit without this being based on any Islamic contract. It is done on the basis of mutual agreement. What is the ruling in this regard?

Answer #1768:

Such transactions are considered ribā-bearing loans. The condition to get ribā is invalid. The increase is regarded as ribā and is, therefore, ḥarām and not permissible to be taken.

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