✿ Written by: Saudi Fatwa Committee (Fatāwā)
A man lends money to another on the condition that the borrower will give him a piece of agricultural land as collateral. The lender will cultivate this land and either keep all of the crop or divide it equally with the borrower. Once the borrower repays the full amount, the land will be returned to him. What is the ruling of Sharīʿah on such a conditional loan?
The primary purpose of a loan (qarḍ) in Islamic law is benevolence and ease for the borrower, not profit-making. Lending with kindness and for the sake of helping others is an act beloved to Allah ﷻ, as He says:
«وَأَحْسِنُوا ۛ إِنَّ اللَّهَ يُحِبُّ الْمُحْسِنِينَ»
(Al-Baqarah: 195)
“And do good; indeed, Allah loves the doers of good.”
The Prophet ﷺ himself took a loan of a camel and later returned one better than what he had borrowed, indicating that repayment with goodwill is permissible, but stipulating benefit is not.
(Ṣaḥīḥ Muslim, 1600/118)
A loan is a contract of benevolence (ʿaqd irfāq), not a contract of exchange or business. When a lender stipulates a material benefit—such as the right to use the borrower’s land or share in its produce—the nature of the loan shifts from benevolence to trade, which is not permissible.
This makes the contract invalid and ḥarām, because it becomes:
Let us illustrate with two cases:
① If one says:
“I gave you one dinar as a loan, and you must return one dinar after one year,”
this is permissible as a benevolent act.
② If one says:
“I sold you one dinar for another dinar, payable after one year,”
this becomes a sale involving delay and currency exchange, and if the transaction is incomplete or includes a benefit, it becomes riba.
Thus, a lender may not stipulate any gain or return beyond the original loan—whether in cash, crop, rent, or service.
The scholars have established a fundamental principle:
"كل قرض جر نفعًا فهو ربا"
“Every loan that brings benefit is riba.”
It is not permissible for the lender to stipulate that:
Even if a share is returned to the borrower, this is still riba, as it involves a benefit tied to the loan, and the loan has now departed from its intended purpose—benevolence and kindness.
Reference:
Ibn ʿUthaymīn – Nūr ʿalā ad-Darb, 7/236
❖ Question:
A man lends money to another on the condition that the borrower will give him a piece of agricultural land as collateral. The lender will cultivate this land and either keep all of the crop or divide it equally with the borrower. Once the borrower repays the full amount, the land will be returned to him. What is the ruling of Sharīʿah on such a conditional loan?
❖ Answer:
The primary purpose of a loan (qarḍ) in Islamic law is benevolence and ease for the borrower, not profit-making. Lending with kindness and for the sake of helping others is an act beloved to Allah ﷻ, as He says:
«وَأَحْسِنُوا ۛ إِنَّ اللَّهَ يُحِبُّ الْمُحْسِنِينَ»
(Al-Baqarah: 195)
“And do good; indeed, Allah loves the doers of good.”
The Prophet ﷺ himself took a loan of a camel and later returned one better than what he had borrowed, indicating that repayment with goodwill is permissible, but stipulating benefit is not.
(Ṣaḥīḥ Muslim, 1600/118)
❖ Why Conditional Benefits Invalidate the Loan
A loan is a contract of benevolence (ʿaqd irfāq), not a contract of exchange or business. When a lender stipulates a material benefit—such as the right to use the borrower’s land or share in its produce—the nature of the loan shifts from benevolence to trade, which is not permissible.
This makes the contract invalid and ḥarām, because it becomes:
- A form of riba (interest)
- A commercial transaction in disguise, contrary to the true purpose of a loan
❖ Difference Between Permissible and Prohibited Scenarios
Let us illustrate with two cases:
① If one says:
“I gave you one dinar as a loan, and you must return one dinar after one year,”
this is permissible as a benevolent act.
② If one says:
“I sold you one dinar for another dinar, payable after one year,”
this becomes a sale involving delay and currency exchange, and if the transaction is incomplete or includes a benefit, it becomes riba.
Thus, a lender may not stipulate any gain or return beyond the original loan—whether in cash, crop, rent, or service.
❖ Legal Principle
The scholars have established a fundamental principle:
"كل قرض جر نفعًا فهو ربا"
“Every loan that brings benefit is riba.”
❖ Final Verdict
It is not permissible for the lender to stipulate that:
- The borrower give him land,
- The lender cultivates it,
- And keeps all or part of the produce,
Even if a share is returned to the borrower, this is still riba, as it involves a benefit tied to the loan, and the loan has now departed from its intended purpose—benevolence and kindness.
Reference:
Ibn ʿUthaymīn – Nūr ʿalā ad-Darb, 7/236
