A form of interest (sale on credit at a mark-up)

Question

Question: A man stockpiles betel nut (areca nut) and rice, and when people fall into hardship or poverty they go to him and take betel nut or rice on credit, and he sells to them at an increase of two or three times the market rate. Is this form permissible according to the Shari‘a or not?

Answer

Selling on credit in this way is not interest according to the Shari‘a; rather, such a sale (bay‘) is valid. However, it is contrary to magnanimity: in a time of high prices one needs to show kindness and magnanimity to the poor, and this too befits noble character. In al-Durr al-Mukhtar, in the chapter “Murabaha and Tawliya” (sale at a mark-up and sale at cost)

Source: Fatawa Mahmudiyya

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