The Shari‘a ruling on interest-bearing government loans and bank interest

Question

Question: Under the government’s development plans, many departments have been set up for the prosperity and welfare of the people of India, through which long-term loans are given according to need and expediency, and a nominal interest is charged. The government gives loans for everything from small industries to large factories and projects. Non-Muslims are deriving considerable benefit from this and are advancing day by day in the economic field.

Answer

The prohibition of interest (riba) is not a secondary ruling derived by inference (istinbat); rather, it is explicitly established by the text (mansus) and categorical: [ar]وَحَرَّمَ ٱلرِّبَوٰا۟[/ar] “…and Allah has forbidden riba” (Surah al-Baqara, 2:275).

Source: Fatawa Mahmudiyya

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