Settling a 2005 Loan Today: How Present Value is Calculated

Ruhul Mirza via E-mail

Query:

In 2005, I lent 5,000 taka to an individual who failed to repay it over the years. By Allah’s grace, his financial situation has recently improved, and he now wishes to settle the debt. Additionally, he wants to pay an extra amount, reasoning that the purchasing power of money was higher back then compared to now. Can I accept this extra amount from him?

Answer:

No, you cannot. In the case of a financial loan (Qard), the exact amount or quantity borrowed must be repaid, regardless of how much time has passed. For example, if a loan consists of 100 taka or one maund of rice, the repayment must strictly be 100 taka or one maund of rice. Any amount paid over and above the principal amount is considered Riba (usury/interest).

Answered by: Allama Mufti Obaidur Rahman Khan Nadwi

Source: Jame-ul-Fatawa, Islamic Fiqh and Fatwa Encyclopedia

Use the email address below to submit your questions.

inqilabqna@gmail.com