Company Arranged Loan for Purchase of Home
Fatwa No: 83543


My company is a multinational foreign based company involved in oil and gas exploration and production in Pakistan. My company authorizes its employees to get certain amount of loan only for purchase of home from any loan-providing institution (bank or any other) as per amount sanctioned by company. These institutions (banks etc.) provide loan to employees and also charge certain markup on loan. Employees will return back only principal amount of loan and markup will be reimbursed by the company. Is this process of taking loan OK for Muslims, I mean is the return of principal amount by employee himself and payment of interest/markup by the employer according to Qur'an, Sunnah and Sharia?


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  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) is His slave and Messenger.


The procedure mentioned in the question is not permissible since it is considered as approving Riba and cooperating with it. Allah Says (what means): {… but do not help one another in sin and transgression …} [Quran 5:2]

Besides, Jaabir  may  Allaah  be  pleased  with  him narrated that the Prophet  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) said “Allah has cursed the one who consumes Riba (i.e. usury or interest), the one who gives it to others, the one who records it and the one who witnesses it (its transaction).” He  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ) added: “All of them are equal in sin.” [Muslim]

You should also inform other Muslims to avoid such practice since it is a serious evil.

Moreover, dealing with usury is declaring war against Allah and His Prophet  sallallaahu  `alayhi  wa  sallam ( may  Allaah exalt his mention ). So it destroys the money and brings Allah's rage.

For more benefit, please refer to Fataawa, 81460 and 82102.

Allah knows best.

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