An interest-bearing loan from a bank

Question

Question: Here in Malaysia there live Muslims engaged in trade. They take money from the bank for trade, and the bank collects one percent extra from them. Likewise, some people are in employment; they take loans from the government and have to pay half a percent extra, that is, half a rupee on a hundred rupees. Is this interest or not?

Answer

This is interest (riba). In the noble hadith a curse has come upon the one who takes interest and the one who gives it, and both have been declared equal in sin: [ar]عن جابر ﵁ قال: لعن رسول الله ﷺ آكل الربا وموكله وكاتبه وشاهديه، وقال: هم سواء.

Source: Fatawa Mahmudiyya

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