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Resolutions of Iftaa' Board

Resolution No.(196): "The Permissibility of Levying Administrative Fees for the Loans Taken from the Governorates Development Fund"

Date Added : 25-11-2015

 

Resolution No.(196)(5/2014) by the Board of Iftaa`, Research and Islamic Studies:

"The Permissibility of Levying Administrative Fees for the Loans Taken from the Governorates Development Fund"

Date: 17/Rabee` Al-Awal/1435 AH, corresponding to 17/2/2014.

 

All perfect praise is due to Allah, The Lord of The Worlds; and may His peace and blessings be upon our Prophet Mohammad and upon all his family and companions:

On the above date, the Board reviewed the letter of the Jordan Enterprise Development Corporation, which reads as follows:

The Governorates Development Fund offers financing through an interest-free loan (Hassan), up to (70%) from the overall cost of the enterprise. The loanee is required to repay in installments over a period of eight years, including a two-year grace period. This is in order to re-use that same amount for financing new enterprises to benefit as many individuals as possible. Moreover, up to (10%) of the enterprise`s profit is deducted in case a profit was produced so as to protect the capital of the Fund to guarantee its continuity, because it is usually used for re-loaning, and no profits are redistributed, or given back to the government. In case of loss, the installments of the interest-free loan are to be repaid, without adding any interest, or profit, and it is possible to delay repayment if the loanee is in a hard up and after examining the reasons for his loss. Based on the afore-said, what is the ruling of Sharia as regards this financing mechanism adopted by the Jordan Enterprise Development Corporation?

After researching and deliberating, the Board decided what follows:

Offering loans to owners of small businesses is an accepted act of charity. It achieves comprehensive development, uproots poverty, increases individual productivity, and helps develop the areas where these enterprises are established.

Therefore, the financing mechanism adopted in the above question is an instance of clear Riba (usury) which has been prohibited by Allah, The Almighty, and His Messenger. It is impermissible for the above Fund to receive a percentage from the profits of the enterprises it finances. However, it is permissible to calculate the actual costs of offering these loans and collecting them, such as salaries of employees, paperwork, rent.. etc. but without the smallest addition, and this could be achieved through imposing a fixed amount of administrative fees. These shouldn`t be tied with the loan`s repayment period, or the enterprise`s profit; rather, they should be tied with the costs necessary for securing the continuity of the Fund, without making any profit by the loaning party. In fact, the Jordan Iftaa` Department, the accredited Fiqh assemblies, and the religious institutions have issued many Facosststwas that permit charging the loanee for the administrative fees of the loan since we believe that it  is the most suitable solution from the perspective of Islamic Sharia. We pray that Allah, The Exalted, Favors us and the Fund`s administrative board with success in serving the community and that their business remains within the boundaries of what is lawful. And Allah Knows Best.

 

Chairman of the Iftaa` Board, The Mufti General of the Hashemite Kingdom of Jordan, His Grace Sheikh Abdulkareem Al-Khasawneh.

Prof. Hayel Abdulhafeez/ Member

Dr. Yahia Al-Botoosh/ Member

His Eminence, Sheikh Sa`ied Hijjawi/ Member

Prof. Mohammad Al-Qudat/ Member

Prof. Abduln`nassir Abu Al Bass`al/ Member

Dr. Mohammad Al-Khalayleh/ Member

Dr. Mohammad Al-Zou`bi/ Member

Dr.Wasif Al-Bak`kri/ Member

Dr. Mohammad Khair Al-Esa

 

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Summarized Fatawaa

What is the Islamic ruling on the Udhiyah (sacrificial offfering)?

 
 
Praise be to Allah, and peace and blessings be upon our Master, the Messenger of Allah.
 
The Udhiyah (sacrificial offering) is a Confirmed Sunnah (Sunnah Mu’akkadah) for every adult Muslim of sound mind who possesses the financial means, whether they are a resident, a traveler, or a pilgrim (Haj). This is based on the statement of the Prophet ﷺ: 'When the ten days [of Dhu al-Hijjah] begin and one of you desires to offer a sacrifice, let him not touch [cut] anything of his hair or skin' [Narrated by Muslim].
 
The point of evidence (Wajh al-Dalalah) here is that the Prophet ﷺ linked the sacrifice to the individual's will and desire by saying, 'and one of you desires.' This indicates that it is not obligatory (Wajib); had it been mandatory, he would have simply said, 'let him not touch his hair until he sacrifices' [without making it conditional upon desire].
 
Furthermore, it is narrated that Abu Bakr and Umar (may Allah be pleased with them both) would sometimes refrain from offering the sacrifice out of fear that people might mistakenly view it as an obligatory duty [Narrated by al-Bayhaqi and others with a good (Hasan) chain of transmission]. And Allah the Exalted knows best.

Is it permissible to purchase the Udhiyah on installments?

It is permissible to purchase the sacrificial animal (uḍḥiyyah) on installments or by borrowing its price. However, it is not recommended for the poor to do so, because they are not required to offer a sacrifice, and Allah does not burden a soul beyond its capacity. If doing so would lead to negligence in providing for one's dependents (nafaqah wājibah), then giving precedence to obligatory maintenance over borrowing to buy the sacrifice is appropriate. This is based on the saying of the Prophet (peace and blessings be upon him): "It is sufficient sin for a person to withhold food from those whom he is responsible to support."
 
Furthermore, the sacrifice is valid from one who has a debt, but it is preferable (awlā) to repay the debt first, especially if the debt is due immediately (ḥāll). And Allah Almighty knows best.

My father has debts and asked me to repay them years ago, and I promised him I would do so upon his death — is it permissible for me to go back on my promise given that I am unable to repay them, especially since he refuses to contribute to repayment on the grounds that the debt has become my responsibility by virtue of my promise?

All praise is due to Allah, and peace and blessings be upon our master the Messenger of Allah ﷺ.
The established principle is that a father's debt is to be repaid from his own wealth, if he possesses sufficient means. As for the promise made by the son to repay it on his father's behalf, fulfilling such a promise is strongly recommended, and breaking it is considerably disliked. Shaykh al-Islām Imām al-Nawawī, may Allah have mercy upon him, states: "Fulfilling a promise is emphatically recommended, and breaking it is severely disliked. The evidences for this from the Qurʾān and the Sunnah are well known." [Rawḍat al-Ṭālibīn,Vol. 2/P.278] Shaykh al-Islām Imām Zakariyyā al-Anṣārī, may Allah have mercy upon him, further states: "The reason fulfilling a promise is not obligatory and breaking it is not forbidden is that a promise is in the nature of a gift, and a gift does not become binding except upon receipt." [Asnā al-Maṭālib fī Sharḥ Rawḍ al-Ṭālib,Vol. 2/P.487]
Given that the son does not possess the financial means to fulfil his promise to his father, breaking this promise falls beyond his capacity — and Allah does not burden a soul beyond what it can bear. Since the father himself possesses sufficient wealth to settle his own debt, repayment must be made from his own funds. Should he pass away before doing so, the debt is to be settled from his estate. And Allah the Almighty knows best.

Who is the one deemed "able" (al-qādir), for whom the uḍḥiyah (sacrificial offering) is sunnah?

All praise is due to Allah, and peace and blessings be upon our master, the Messenger of Allah ﷺ.
The one who is deemed "able" (al-qādir) [to perform the uḍḥiyah, i.e., the sacrifice] is someone who possesses wealth sufficient to acquire the sacrificial animal, over and above what is needed to cover his own living expenses and the living expenses of his wife and children — or of anyone else whose financial support (nafaqah) is legally obligatory upon him — for the day of ‘Eid and the three days of Tashrīq [that follow it], since this is the designated time period for the sacrifice. And Allah, the Exalted, knows best.

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