Question

Our company gives loans to its employees on interest (4 to 5 %). One of my colleagues has applied for it & he is asking me to become a guarantor for that. The guarantor gives the surety that in case of non-payment of that loan he will pay it. Does this help come under the category of “Helping in Sins”?

Would you please give me an immediate reply as the time is very short to decide.

Regards

Answer

In a response to one of the questions, regarding Riba‘, I wrote:

… It is quite clear from the related verses of the Qur’an that the real and actual prohibition applies to taking or devouring Riba. The prohibition of giving Riba, which has been mentioned in some of the narratives ascribed to the Prophet (pbuh) is actually only the result of the prohibition of taking Riba – and is not a real and basic prohibition.

This concept needs to be understood in some detail:

As is clear from various verses of the Qur’an, the real prohibition of the Shari`ah applies to taking Riba. The Qur’an, at even a single instance, has not mentioned the prohibition of giving Riba. The reason is quite simple: the real moral crime, the injustice and the exploitation, according to the Qur’an, lies in taking or devouring Riba not in giving Riba. Thus, the basic initial emphasis of the Qur’an and the state of Medinah, under the leadership of the Prophet (pbuh) was to abolish the practice of charging Riba, not of giving Riba. Throughout this time, the Qur’an condemned those who charged Riba, it admonished them and reminded them of the punishment that they shall be faced with on the Day of Judgment for charging Riba, and then finally it gave them the ultimatum that if they do not restrain from charging Riba, the Islamic state – under the leadership of the Prophet (pbuh) – shall declare a war against them (Al-Baqarah 2: 279). During all this time, not a single verse admonished those who paid Riba, they were not threatened with any dire consequences of their act and were never directed by the Prophet (pbuh) to avoid the payment of Riba. On the contrary, the Qur’an actually directed the lenders to deal with them in a soft manner: it directed the lender to give the borrower some time to return the lender’s principal amount, if he was not in a position to do so immediately. It further advised them that if it were possible for them, they should even waive this principal amount as alms and get their rewards for this generous act in the hereafter.

Later on, when the institution of charging Riba was completely abolished and no individual who charged Riba was allowed to operate in the society, it was then that the Prophet (pbuh) declared that (when the society is completely cleared from the evil) even those who offer to pay Riba to secure loans for themselves or who silently accept paying Riba and do not bring it to the notice of the state authorities and those who are scribes of and witnesses to the documentation for Riba-based transactions without bringing such transactions to the notice of the state are accomplices to the crime and, therefore, deserve to be punished [and cursed] for their acts.

As is quite clear from the above, the real sin and crime, according to the Qur’an as well as according to the teachings of the Prophet (pbuh) lies in taking or charging Riba. Agreeing to give Riba becomes a crime when the society is completely cleared from this evil and taking Riba is considered a punishable crime at the state level.

If the above explanation is accepted to be correct, then in my opinion, till the time that taking Riba is declared a punishable crime at the state level, payment of Riba or standing witness on the documentation of Riba or even standing guarantee for a Riba based loan cannot be termed as prohibited. I do agree that in certain cases, such actions may amount to what you have termed as “Helping in sins”, but that would really depend upon the position of the borrower, the purpose for which the loan is being secured and a number of other variables. Moreover, because of the fact that calling something “helping in sins” is dependent on a number of external and sometimes covert variables, there can be a difference of opinion about the issue between two or more people.

In my opinion, one of the evils of a credit-based economy is that it artificially raises the standard of living of the society. Loans are secured, not only to expand business operations or to provide for a personal necessity, but also merely to avail the opportunity of spending more money on luxuries or to artificially improve ones standard of living. Such an attitude is termed as extravagance. Islam very strictly condemns extravagance, and calls those who are wasteful “brothers of Satan”.

With the above explanation in perspective, let us now consider your specific question: In my opinion, if you agree with my point of view explained above, it would only be prudent that you ask your friend regarding the intended use of the borrowed money. If the intended use of the funds, in your opinion, is wasteful spending, then you should try to dissuade your friend from borrowing the money, even if he gets an opportunity to secure the loan free of any interest. On the other hand, if the intended use of the borrowed funds, in your opinion, cannot be termed as wasteful spending, then you may stand guarantee for such a loan.

On the contrary, if you do not agree with my point of view explained above and ascribe to the view that payment of Riba or standing witness or guarantor for a Riba-based loan etc. is a sin in any case, then you should inform your friend of your opinion and not only refuse to stand guarantee for his loan, but also try to politely dissuade him from an action which in your eyes is against the teachings of Islam.

5^th May 1999

Moiz Amjad

UIUK team