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Fatwa CenterTaking an interest-based loan from compulsory savings
Question
I am working in an institution which compulsorily saves a portion of my salary in a bank in return for interest. At the end of my service, I will receive such money in addition to the interest. The firm allows the employees to take a portion from the savings in the form of a loan with interest equal to that interest which they should get in addition to 2 percent as fees for this loan. What is the Sharee’ah ruling on this loan?
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu 'alyhi wa sallam, is His slave and Messenger.
If such a portion is compulsorily deducted from your salary, you are not sinful because you do not have a choice. However, at the end of your service, you have to get rid of the extra interest because it is unlawful for you to take. The ill-gotten gain is not included in the ownership of its earner. You can get rid of it through spending in benevolent channels.
Also, it is impermissible to take a loan from the firm according to the way you have mentioned because it is a loan which results in interest. It is well-known that interest is prohibited by virtue of the Noble Quran. Allaah the Almighty Says (what means): {O you who have believed, fear Allaah and give up what remains [due to you] of Ribaa, if you should be believers. And if you do not, then be informed of a war [against you] from Allaah and His Messenger. But if you repent, you may have your principal [original sum] - [thus] you do no wrong, nor are you wronged.} [Quran 2: 278-279]
Dear questioner, we draw your attention to the fact that you should not take this matter lightly since it has grave consequences on one's religion. You should search for another job which does not include this prohibited practice. There is no blame on you if it is the only available work which you are in need of according to our aforementioned clarification.
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