Benevolent loan/ beautiful loan – al-qardh al-hasan

- Prophet (saw) said: “in the night of the journey, I saw on the
gate of heaven written, ‘reward for sadakah is ten times
and reward for qard al-hasan is eighteen times’. So, I asked
the angel, how is it possible? The angel replied: “Because
beggar who asked had already had something but a
borrower did not ask for loan unless he was in need." (Ibn
Hisham & Ibn Majah).
- Therefore, it is not only a financial assistance but it is also a
praiseworthy act before Allah (SWT).
- AL-Qardh: cutting off because a lender cuts off his property
and gives to the borrower.
- Al-Hasan: benevolent, beautiful or beneficial loan = (no
interest charged)
 Conditions:
1) Legal capacity of both parties
2) Actual possession of the borrowed property
3) Absolute and unconditional right of the borrower
over the borrowed property.
4) The repaid/returned property must be of the same
quantity and type (ex: RM 100 for RM 100) unless
if both parties agree otherwise (according to rate).
5) Any stipulations of increase for delay is prohibited,
however, if the lender is willing to accept his
property in lower quality or quantity it is Halal
besides it is commendable act.
Can a borrower as a sign of appreciation give something extra
to the creditor? Is it Riba?
- Hadiths:
- “Jabir bin Abdullah (R) reported that I had the right (of
loan) on the Messenger of Allah, he had settled it and made
additional payment to me.”
- Abu Rafi' reported that the Prophet pbuh had borrowed a
young female camel from someone and when he received
zakat of camels, he ordered me to send a young female
camel to the man as settlement of the loan. I said to him, “I
could not find among the camels except a female camel
which is ready for pregnancy”. The Prophet (s.a.s) said,
“give it to him, indeed, the good person among you is he
who settles loan with something better.”
6) Majority – in contrast to Malikis – do not allow stipulation
of fixed time for settlement of qardh. Dayn is an obligation
for a certain period of time while qardh is obligation for
uncertain period.
- Malikis: no difference between qardh and dayn.
- Majority – in contrast to Malikis - argue that the following
verse is not about qardh but about dayn: “O ye who believe
when ye deal with each other, in transactions involving
future obligations in a fixed period of time, reduce them to
writing” (2:282)
- Malikis: if time is specified the lender is not allowed to
request the borrower to return the loan before the due
date.
7) The settlement should be made at any time when it is
asked back by the creditor. It is to make qard al-hassan
different from riba al-fadhl.

8) There should be no stipulation concerning the place of

returning the borrowed property.

9) It is not permitted to put any pre-condition in a qard

contract.

10) Either of the contracting parties may rescind the contract

at will.
Waiting or giving time to a borrower is a commendable act
• If a debtor is defaulting in payment due to poverty then he
must be given respite until he is in a position to pay.
However, it is more virtuous to forgive him altogether.
• The Quran says:
}‫ص َّدقُوا َخ ْْيٌ لَ ُك ْم إِ ْن ُك ْن تُ ْم تَ ْعلَ ُمو َن‬ ٍ ِ ٍ
َ َ‫{ َوإِ ْن َكا َن ذُو ُع ْس َرة فَ نَظ َرةٌ إِ ََل َم ْي َس َرة َوأَ ْن ت‬
"If the debtor is in a difficulty, grant him time till it is easy for
him to repay. But if ye remit it by way of charity, that is best
for you, if ye only knew" (2:280).
- No extra charges even if the debtor has no excuse
otherwise it is Riba.
- However, a borrower should avoid procrastination.
ٍ ِ‫”مطْل الْغَِِن ظُلْم وإِ َذا أُتْبِع أَح ُد ُكم علَ ى مل‬
- Hadith says: “‫ءٍ فَ لْيَ ْت بَ ْع‬ َ َ ْ َ َ ٌَ ‫َ ُ ي‬
- “Deliberate delay of a rich borrower to settle the loan
is injustice”.
- Upon death of creditor the debt becomes current
loan.
 Qard and Islamic banks
AAOIFI Shariah Standard:
“Qard is a transfer of ownership in fungible wealth to a
person on whom it is binding to return wealth similar to it”
- So: Islamic Bank is a borrower while its client is a lender.
- Qard is used to structure Islamic banking deposits for
Islamic saving and current accounts.
- Islamic Bank invests the money to finance its customers
such as retail and business clients.
- Depositor/lender may withdraw the money at any time.
- Islamic bank is a guarantor.
- Islamic bank may charge for the service rendered to
the holders of current accounts
- Islamic bank is allowed to offer benefits in terms of
quantity or quality at the time of repayment on basis
of generosity and goodwill
- So, Sharia Advisory Council of Bank Negara (meeting
No 55, on 29/12/2005) agreed to consider an offer of
Hibah as permissible.
- But NO STIPULATION of benefits at the moment of
signing contract is allowed.
- However, Hibah should not become Urf (custom)