We intend to sponsor our parents' Hajj pilgrimage this year. As five siblings, we're pooling our resources to cover the necessary expenses. However, one of my sisters has contributed funds obtained through a bank loan. Is it permissible for her loaned money to be used for our parents' Hajj and fulfill their obligation?

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad is His slave and Messenger.

There is nothing wrong with utilizing the interest-based loan your sister borrowed to enable your parents to perform Hajj or in any other (lawful) purpose, as the prohibition is related to your sister's financial liability, not the borrowed money itself. However, you should advise your sister to repent for taking interest-based loans by regretting what she did and resolving not to repeat it.

Allah knows best.