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Fatwa CenterHospital funded by interest-bearing loan
Question
Six directors including my father and uncle are running a multi-specialty hospital. It has all modern facilities. Its finance is from bank loan paid back in interest every month. The hospital is one of the best in Kerala, South India. Hundreds of staff are working here with very good salary. Huge amounts are given in charity. Poor patients are given free treatment. My question is whether income from this hospital is Halal as loan is paid back in interest?
Answer
Praise be to Allah, the Lord of the Worlds; and may His blessings and peace be upon our Prophet Muhammad and upon all his Family and Companions. Before any loan contract could be valid, it should be free from any interest. If it includes interest, the contract is invalid. The invalidity of the contract means that whoever takes the loan has no authority to own or to dispose of it. If he disposes of it by using it to build a shop, hospital or whatever, the amount that he should pay back as stipulated in the contract becomes ineffective. He therefore needs to pay back exactly the equivalent of the amount he took without any addition. The evidence for this is the Saying of Allah, {You shall have your capital sums. Deal not unjustly (by asking more than your capital sums), and you shall not be dealt with unjustly (by receiving less than your capital sums).}[2:279]. If the borrower returns the borrowed money to its owner, he purifies his own money and whatever gains he achieves. His work and his earnings from this hospital become lawful. What he is obliged to do is to return only the capital to the creditor. He should not pay any interest, unless he is forced to do so by the law. It should be added that whoever takes an interest loan should repent to Allah sincerely. This is because, usury is one of the greatest sins. Allah knows best.
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