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  • Earning Interest On Contributions For Later Interest Payment

    Posted by Muhammad Shafique on January 26, 2024 at 8:57 am

    I work in an organisation which gets optional subscription on monthly basis. It gives interest to subscribers by earning profit from doing business. Here I have the option to take interest or not.

    Same organisation has another scheme of offering constructed houses partly from my subscription (in addition to cited above in previous scheme) and partly using its own money. Here they say any amount spent in addition to my own subscription will be liable to interest. Meaning that I have to pay interest as compulsion.

    Now is it ok for me to opt for interest in first scheme (though I have option for not taking) to pay compulsory interest in second scheme?

    Umer replied 4 months, 3 weeks ago 2 Members · 1 Reply
  • 1 Reply
  • Earning Interest On Contributions For Later Interest Payment

    Umer updated 4 months, 3 weeks ago 2 Members · 1 Reply
  • Umer

    Moderator January 30, 2024 at 2:10 am

    For something to be categorized as interest, it needs to be a loan arrangement and lender must demand profit on loan. Merely presence of a fixed return doesn’t necessarily make it interest. Financing arrangements/Investments may also included fixed amount of return. Therefore, the distinguishing factor here is the presence/absence of a loan arrangement. If the organization is taking loan from the subscribers and lenders are demanding profit on that loan, then this is interest. And as far as interest it concerned, its consumption is prohibited in Islam but there is no prohibition for somone who is paying it. One can make a query in this regard from the relevant organization and rely on the face value of their statement.

    Therefore, if the first scheme fulfills the criteria of being called interest then it cannot be consumed however, payment can be made in the second scheme. The former interest cannot be consumed to fulfil the needs of the latter interest payment.

    Please see regarding payment of Interest:

    Discussion 72050


    Please also refer to the video below from 39:28 to 41:11 regarding determination of a loan arrangement or a financing arrangement

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