Profit on a loan is interest

Question

Question: Zayd took one thousand rupees from Bakr and said: “I will keep giving you forty rupees a month, regarding it as profit, until I repay the principal.” Zayd, as promised, kept giving forty rupees a month as profit. After a year had passed, by misfortune Zayd suffered a loss of thousands of rupees in his business: his own money and Bakr’s one thousand rupees all went into the loss; and not only that — he also fell into debt by thousands.

Answer

(1/2/3) Making an agreement to pay money on a loan in this way, and paying it, is not permissible; this is certainly interest (riba), and even if it is named profit, it remains interest. It is stated in the books of fiqh: [ar]كُلُّ قَرْضٍ جَرَّ نَفْعًا حَرَامٌ[/ar] “Every loan that draws a benefit is haram” (al-Durr al-Mukhtar), i.e.

Source: Fatawa Mahmudiyya

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