Salam instead of a loan repaid in paddy at a reduced rate

Question

Question: For example, these days the price of paddy is 25 rupees a maund (a unit of weight, ≈ 37 kg). Zayd asks us for a loan of money and says: “At the harvest I will give you paddy at eight rupees a maund.” Is it permissible to give money in this way or not?

Answer

Making a loan transaction in this way is not correct according to the Shari‘a, because loans are repaid with their like (لأن الإقراض تقضى بأمثالها). However, a salam transaction can be made, namely: the price is given in advance and the paddy is received after (the harvest).

Source: Fatawa Mahmudiyya

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