✿ Written by: Saudi Fatwa Committee (Fatāwā)
When a person gives a loan to someone, it is not permissible for the lender to stipulate a condition that he will derive benefit in return—such as using the debtor’s property—in exchange for the loan.
The Prophet ﷺ is reported to have said:
“Every loan that brings a benefit is riba (interest).”
(Ḍaʿīf – Ḍaʿīf al-Jāmiʿ, Ḥadīth no. 4244)
Though the narration is weak, the scholars have unanimously agreed on its meaning and ruling.
If the lender takes a piece of land as collateral (rahn) and uses it—benefiting from its produce or renting it out—until the loan is repaid, this falls under the same prohibition.
Similarly, if the lender says:
“Until you repay your debt, I will take the crop or profit from your land,”
this is also not allowed.
The purpose of rahn is documentation and assurance that the loan will be repaid. It is not intended as a source of benefit for the lender in return for:
Benefiting from the collateral constitutes riba, and is therefore prohibited.
Reference:
Al-Lajnah ad-Dāʾimah, Fatwā No. 17393
❖ Benefiting from a Mortgaged Property Against a Loan
When a person gives a loan to someone, it is not permissible for the lender to stipulate a condition that he will derive benefit in return—such as using the debtor’s property—in exchange for the loan.
The Prophet ﷺ is reported to have said:
“Every loan that brings a benefit is riba (interest).”
(Ḍaʿīf – Ḍaʿīf al-Jāmiʿ, Ḥadīth no. 4244)
Though the narration is weak, the scholars have unanimously agreed on its meaning and ruling.
❖ Example of an Impermissible Benefit
If the lender takes a piece of land as collateral (rahn) and uses it—benefiting from its produce or renting it out—until the loan is repaid, this falls under the same prohibition.
Similarly, if the lender says:
“Until you repay your debt, I will take the crop or profit from your land,”
this is also not allowed.
❖ Purpose of Rahn (Pledge)
The purpose of rahn is documentation and assurance that the loan will be repaid. It is not intended as a source of benefit for the lender in return for:
- Giving the loan
- Or as compensation for the delay in repayment
Benefiting from the collateral constitutes riba, and is therefore prohibited.
Reference:
Al-Lajnah ad-Dāʾimah, Fatwā No. 17393
