Guarantee in Ribā Transactions
Economic Issues
Question asked by .
Answered by Asif Iftikhar

Whether a creditor can fix time and rate of profit while the debtor saying Inshā Allah, he will be able to earn and pay the same in time; failing which the guarantor may give profit asked for plus also a bonus or compensation for delayed payment, if any, also according to other arrangements regarding the loan. What will be the position if the system of insurance for the said profit is introduced?


When a lender fixes time and rate of gain (‘profit’) on the loan he gives, he demands Ribā in effect. Guaranteeing something which is prohibited in Sharī‘ah amounts to co-operation in the commission of the evil Sharī‘ah has prohibited, and cannot be allowed (5:2)

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