A loan, then, is a recognized act of kindness: it lifts a fellow Muslim’s financial burden and meets his need. Borrowing itself is not among the censured forms of asking, for the Prophet ﷺ himself borrowed.

For a loan to be valid, the lender must be someone who is legally entitled to give his property away; thus the guardian of an orphan, for example, may not lend from the orphan’s estate. The amount advanced must also be precisely known, together with its specifications, so that an equivalent can be returned to its owner. Once concluded, the loan becomes a debt attached to the borrower’s liability, and he is obliged to repay it as soon as he is able, without procrastination.

It is unlawful for the lender to stipulate any increment over the principal. The scholars are unanimously agreed that if an extra amount is conditioned and then collected, it is ribā (usury). Accordingly, the interest-based lending practiced by banks today is plain ribā, whether the loan is for consumption or, as they call it, for development. No lender—whether a bank, an individual, or a company—may exact a stipulated increase on a loan, whatever name is given to that increase. Whether it is called profit, interest, a gift, free lodging, or the use of a car, so long as that additional amount, gift, or benefit results from a prior condition,