Other Dealings Al-Qardh (Lending and Loans)
Its Definition
The Qardh (loan) linguistically means cutting. In Islamic terminology, it means paying an amount of wealth to someone who wants to benefit from it, then he returns it to him later. For example, a needy person asks someone, whose donation is legally acceptable: “Give me such and such amount of money or commodity or animal as a loan or credit for a fixed period and I will return it to you.” Therefore, he gives it to him.
Its Ruling
Lending a loan is a recommended act for those who are able to give loans. This is due to Allah’s statement:
(Who is he that will lend Allah a goodly loan: then (Allah) will increase it manifold to his credit (in: repaying), and he will have (besides) a good reward (i.e., Paradise).) (57:11)
The Messenger of Allah (SAW) said:
“Whoever relieves his brother of a difficulty from the difficulties of this world, Allah (SWT) will relieve him of a difficulty from the difficulties of the Day of Resurrection.” (Muslim)
As for the one who receives a loan, it is permissible and allowed and there is no harm in it. This is because the Messenger of Allah (SAW) himself borrowed a virgin camel and he returned a better camel.
The Messenger of Allah (SAW) said:
“Verily from the best of people are those who are the best of them in repaying loans.” (Al-Bukhari)
Its Conditions
The conditions of loans are as follows:
1) To know the amount of the loan by measurement, weight, and quantity.
2) To know the description of the loan, and the age if it is an animal.
3) The loan should be from someone whose loan is valid. Therefore, the loan is invalid from one who does not own what is loaned, as well as from those who are immature and insane.
Its Regulations
There are certain laws for lending a loan:
1) What is loaned is thereafter owned by possession. Whenever the receiver of the loan takes possession of it, he owns it and thus the loan will be under his obligation.
2) Lending a loan is permissible for a fixed term. However, it is better to lend a loan without a fixed term, due to what it contains of gentleness and kindness towards the borrower.
3) If the loaned article remains in the same condition that it was in on the day that the loan was received, it is returned to the lender. If it changes by a decrease or increase in it, a similar thing should be returned to him, if a similar thing is available. Otherwise, he should repay its value.
4) If the loaned article bears no expense in carrying it, the receiver can return it to the lender wherever the latter wishes. Otherwise (if there is expense involved), the receiver of the loan has no obligation to repay it at other than its place (where he borrowed it).
5) Any profit that the loan brings to the lender is forbidden, whether it is an increase in the loan, an improvement to it or any other benefit, which is outside of the concept of loaning. Particularly, when the lender and the receiver of the loan have made an agreement in this regard. However, if there is some benefit given to the lender simply due to an act of kindness from the borrower, there is no harm in that. This is because the Messenger of Allah (SAW) gave a choice camel in return for a small virgin camel that he had received as a loan. Then He (SAW) said:
“Verily from the best of people are the best of them in repaying loans.” (Al-Bukhari)
An Entrustment
Its Definition
The entrustment refers to something that is left behind, such as money or other things, with someone who will keep it and return it to the owner whenever he requests it.
Its Ruling
Entrustments are lawful. Allah (SWT) says:
(Let the one who is entrusted, discharge his trust (faithfully).) (2:283)
He also says:
(Verily, Allah commands that you should render back the trusts to those whom they are due. (4:58)
The Messenger of Allah (SAW) said:
“Render back the trust to the one who entrusted you, and do not cheat the one who cheated you.” (Abu Dawud and At-Tirmithi, who graded it Hasan)
The entrustment is a kind of trust. The rule of the trust varies in different situations. Sometimes the acceptance of the trusts becomes obligatory upon the Muslim. This when the Muslim is forced to have someone store his money, and there is no one else available to keep it other than that person. Sometimes keeping someone’s wealth for them is a recommended act, if the owner of it requests someone to keep it although he is able to keep it himself. This is because such an act is considered mutual cooperation in righteousness as Allah commands in His saying:
(Help you another in Al-Birr and At-Taqwa (virtue, righteousness and piety). (5:2)
Sometimes accepting the trust or deposit becomes disliked if one is unable to keep the money.
Its Regulations
1) Both the depositor and the one who keeps the trust should be among those who are responsible and mature (i.e., sane in mind, legally responsible). Therefore, it is not allowed for the child or the insane to entrust someone with something or to be entrusted.
2) The one who keeps the trust is not a guarantor if the item is damaged without his negligence or excessiveness.
The Messenger of Allah (SAW) said:
“There is no guarantee upon the one who is given a trust.” (Ad-Daraqutni and there is weakness in its chain of narration. However, the majority of scholars act according to it.)
The Messenger of Allah (SAW) said:
"Whoever is given a trust has no obligation of guarantee upon him.”
(Ibn Majah and there is weakness in its chain of narration) [1]
3) It is permissible for the depositor to request the return of the item whenever he wants it, and as well as for the one entrusted to return it whenever he wishes.
4) The one entrusted has no right to obtain any sort of benefit by usage of the item, except with the permission and approval of the depositor.
5) If any dispute arises over the return of the trust, the claim of the one who keeps the deposit should be accepted by his swearing. If the depositor produces the proof claiming that the deposit had not been returned to him, then his claim should be accepted.
Recording the Deposit
(a) Textual Format for Recording the Deposit:
“So-and-so agrees that he has possessed and received from so-and-so such and such amount. This occurred in the manner of a legal deposit. It is obligatory upon him to keep and protect the deposit in the proper way and location according to the instructions of the depositor. The above-mentioned depositor was present and attested to this record by a legal attestation.”
(b) Textual Format for Recording the Return of the Deposit:
“So-and-so agrees that he has possessed and received from so-and-so an amount of such and such as a legal possession. Therefore, this amount has come to him and is in his hand and possession. This amount is exactly equivalent to what he deposited with the entrusted before this date. He has not delayed anything from it, more or less. The payer also attests to this fact as a legal attestation. This has occurred on such and such date.”
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[1] The meaning of this Hadith is that if something entrusted to someone becomes damaged or destroyed, he is not responsible for it as long as there was no negligence or destructive misuse involved.
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Gratuitous Loan
Its Definition
A gratuitous loan refers to a thing that a person gives to another for his benefit for some time and then he returns it to him. For example, a Muslim borrows a pen from another for writing or a garment for wearing, then he returns it to him after using it.
Its Ruling
Giving a gratuitous loan is permissible. Allah (SWT) said:
(Help you one another in Al-Birr and At-Taqwa.) (5:2)
Allah (SWT) said:
((And (those who) withhold Al-Ma ‘un (small kindness).)) (107:7)
The Messenger of Allah (SAW) said to Safwan bin Umayyah at the battle of Hunayan, when he borrowed a coat of armor from him:
“Nay, it is a loan with a guarantee (of return).” (Abu Dawud, Ahmad, and An-Nasa’I, and Al-Hakim graded it Sahih).
The Messenger of Allah (SAW) said:
“There is no owner of camels, cows or sheep, who does not give their due except that he will be made to sit at a spot of flat land for them on the Day of Resurrection. Then the ones with cloven hooves will trample him, and those with horns will butt him. There will no lean ones or ones with broken horns among them.”
We said, “O Messenger of Allah (SAW)! What is their due?” He (SAW) replied:
“Lending their males for studding, loaning out their buckets, lending them for usage, allowing them to be milked while they drink water and allowing them to be used in the way of Allah (SWT).” (Al-Bukhari)
The ruling of the gratuitous loan is that it is recommended. Allah (SWT) said:
(Help you one another in Al-Birr and At-Taqwa.) (5:2)
The giving of gratuitous loan is compulsory upon one if a Muslim is compelled to borrow something from him while he himself is in no real need of it, and his Muslim brother needs it for certain.
Its Regulations
There are certain laws concerning gratuitous loans:
1) Only lawful things may be given as gratuitous loans. Therefore, it is not permissible to give a female slave as a gratuitous loan to be used for sexual relations. A Muslim should not be given as gratuitous loan for the service of a disbeliever. Perfume or a garment should not be given as gratuitous loan for a prohibited purpose. This is because cooperating in that which is sinful is a prohibited act. This is due to Allah’s statement:
(But do not help one another in sin and transgression.) (5:2)
2) If the lender (loaner) stipulates a guarantee as a condition for his gratuitous loan, the borrower is responsible for it if he damages it. This is due to the Messenger of Allah’s statement:
“Muslims are bound to their contractual conditions.” (Abu Dawud and Al-Hakim)
If he did not include such a condition of guarantee and the loaned item became damaged without his negligence or excessiveness, he is not responsible for it. However, it is preferable to have a guarantee. This is due to the Messenger of Allah’s statement to one of his wives who broke a food vessel:
“Food for food and container for container.” (Al-Bukhari)
If it becomes damaged due to his negligence and excessiveness, he (the borrower) will be responsible for providing something similar to it or (paying) its value. This is due to the Messenger of Allah’s statement:
“The hand which takes is responsible till it renders back.” (Abu Dawud, At-Tirmithi, and Al-Hakim, who graded it Sahih)
3) The borrower is responsible for the expenditure of returning it. For example, if the loan item cannot be carried except with the help of a laborer, or fare of a taxi. This is due to the Messenger of Allah’s statement:
“The hand which takes is responsible till it renders back.”
4) It is not permissible for a borrower to rent out what he borrowed. However, there is no problem with him letting someone else borrow the item if he is certain that the original loaner would approve of that. If he is not certain that the original owner would mind him lending it out to someone else, it is not permissible for him to do so.
5) If a person loans a wall for placing a piece of wood (in it), for example, it is not permissible for him to take back his loan until the wall in question has collapsed. Similarly, whoever loans some land for farming, it is not permissible for him to take his land back until the crop is harvested, as this would cause harm to the Muslims, which is forbidden.
6) If a person loans something for a fixed period, it is recommended that he not seek its return until after the fixed term expires.
Textual Format for Recording a Gratuitous Loan
“So-and-so has given a gratuitous loan to so-and-so. That loan is for him, in his possession and under his control. That is the whole of such and such building, or such and such plant, or such and such garment or such and such riding animal. This is for his occupation, wearing, or riding the above-mentioned thing for a period of such and such time or for a distance of such and such. This is a valid gratuitous loan, which is lawful, guaranteed and returnable after its use when its period expires. The borrower received the same as per a legal receipt. Thus, this came into his possession and under his control according to the details that they mutually agreed to. Both of the parties have agreed to all of the above contents as per a legal agreement. This has been registered on such and such date.”