Resolution No.(72): “Ruling on Charging a Percentage on Loans as an Allowance for Administrative Expenses and the Like“
Date: 18/9/1424 AH corresponding to 12/11/2003 AD.
The Board received the following question:
What is the ruling of Islamic Sharia on charging a percentage on loans as an allowance for administrative expenses and the like?
Answer: All success is due to Allah.
The Board is of the view that giving cash loans up to (800) JDs without a guarantee and with charging 3% as a contribution and allowance for administrative expenses isn`t permissible because this percentage is considered usury. However, it is permissible to charge a specific sum in return for administrative expenses and as a contribution, whether the loan is big or small. And Allah Knows Best.