Repaying debt with extra

Repaying debt with extra

Question

Assalamu alaikum wa rahmatullah

Consider a person takes a loan (say 100,000 Taka) and intends to pay it back after a long time, say ten years. By ten years the value of the currency has changed significantly (compared to USD, which is what the value of Bangladeshi Taka is often compared to). Now, does the person repay exactly 100,000 Taka, or does he need to calculate the payable considering the exchange rates (again, compared to USD) then (ten years ago) and now?

To me it seems unjust to repay the exact amount in such scenario as the value of currency has changed significantly. I also know that the rule is repaying the exact amount, but I cannot reconcile this rule with the Hadith where rasulullah (SA) repaid Jabir ibn Abdillah with an extra when repaying the debt (Sahih al-Bukhari 2394, In-book: Book 43, Hadith 10).

Can you please explain how the payable should be determined in such a scenario? Jazakallahu Khairan


Answer

When taking out a loan one must ensure that certain rules are followed. This is to ensure that an interest based transaction does not occur and that one returns the exact amount that was borrowed. If a person gives extra then it would fall into one of the following scenarios:

1. If that additional amount was agreed upon as part of the loan agreement then it will be interest and unlawful. This would be the case even in a scenario where there was no verbal or written agreement to give extra, but it was implied through customary practice to give extra.

2. If the borrower, of their own accord, without any sort of stipulation or customary practice, opted to give an additional amount when returning the loan then this would be permissible. However, the lender cannot demand or request this amount.

The hadiths regarding giving extra or returning something of better quality would apply to the second scenario.

As for the fluctuation in value, this is something that the lender will have to take into consideration before giving a loan. One way around this is to lend gold as opposed to currency. For example, if the borrower wanted £10,000, then instead of giving that amount in pounds the lender could give gold to that amount. Let’s assume this to be 22 grams of gold. Then at the time of repayment the borrower will have to give 22 grams of gold back regardless of the value. This could be one way in which the lender protects themselves from the risk of fluctuation in currency, though there will still be a fluctuation in the gold price.

عمدة القاري شرح صحيح البخاري (12/ 232)
عنْ جابِرِ بنِ عبدِ الله رَضِي الله تَعَالَى عَنْهُمَا قَالَ أتيْتُ النبيَّ صلى الله عَلَيْهِ وَسلم وهْوَ فِي المسْجِدِ قَالَ مِسْعَرٌ أُرَاهُ قَالَ ضُحىً فَقَالَ صَلِّ رَكْعَتَيْنِ وكانَ لِي عَلَيْهِ دَيْنٌ فَقَضَانِي وزَادني

سنن الترمذي ت بشار (2/ 600)
عَنْ أَبِي رَافِعٍ، مَوْلَى رَسُولِ اللهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ قَالَ: اسْتَسْلَفَ رَسُولُ اللهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ مِنْ رَجُلٍ بَكْرًا، فَجَاءَتْهُ إِبِلٌ مِنَ الصَّدَقَةِ، قَالَ أَبُو رَافِعٍ: فَأَمَرَنِي رَسُولُ اللهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ أَنْ أَقْضِيَ الرَّجُلَ بَكْرَهُ، فَقُلْتُ: لاَ أَجِدُ فِي الإِبِلِ إِلاَّ جَمَلاً خِيَارًا رَبَاعِيًا، فَقَالَ رَسُولُ اللهِ صَلَّى اللَّهُ عَلَيْهِ وَسَلَّمَ: أَعْطِهِ إِيَّاهُ، فَإِنَّ خِيَارَ النَّاسِ أَحْسَنُهُمْ قَضَاءً

Answered by:
Ifta Research Fellow

Checked & Approved by:
Mufti Abdul Rahman Mangera
Mufti Zubair Patel