Riba In Secured Loans For Consumables
Scenario 1: No Riba: The borrower paid from him guaranteed profits. It became more like a business. Scenario 2: Bank charges are cost of doing business. If these are ACTUAL paperwork and transaction charges and not an inflated amount to disguise interest, then it is not Riba. Scenario 3: This is Riba: You simply can’t make money on loaned money for someone’s pressing personal needs, where money is consumed and where the money needs to regenerated. If the lender loses 10%, he shouldn’t loan the money. Even if the borrower agrees to pay 10% cost of lender’s loss, it is still Riba. Islam asks people, in this case to loan money to such people without interest and if they absolutely can’t give it back then let the loan go as charity / Zakat. That is why when I personally give loan to a poor person for a pressing need for consumable, I only loan amount that I could let go as charity, in case the borrower is unable to pay.