Is it permissible to charge for the loss in value of money when borrowing?

- Is it appropriate to act upon the fatwa stating that the loss in value of money can be taken into account when borrowing and lending?
- Is such a fatwa sufficient?

Dear Brother / Sister,

- The most prominent characteristic of Islam is justice. In a country with inflation, for example, if someone lends 1,000 lira for six months and, six months later -due to inflation- the purchasing power of that money has fallen to, say, 900 lira, how can we explain the fact that the lender loses 100 lira as a result of the kindness of lending?

- In the past, there was -generally speaking- no such thing as inflation. Ijtihads were made accordingly.

According to Imam Abu Yusuf, who served as a qadi for a long time, gold, silver, and coins are all valued according to the prevailing silver price on the day the contract is made in sales matters, and on the day the loan is repaid in loan matters; the fatwa is based on it. (See Kardari, Bazzaziya, 5/510). The principle the Imam established in this regard is noteworthy.

- Maliki madhhab, while holding the view -like Imam Abu Hanifa- that if gold or silver gains or loses value, payment must be made in kind in terms of weight and fineness, follows the position of the two Imams regarding money/coins. (See Malik, al-Mudawwana, 3/445).

- Shafi’i and Hanbali madhhabs also share the same view on this matter. (See Beki Abdulaziz, İslam’da Modern Ticarî Meseleler, p. 33. Also see Ibn Qudama, al-Mughni, 4/396; Nawawi, Rawzatut-Talibin, 3/29).

- Ibn Abidin’s assessment regarding the issue is also of great importance:

“Imam Abu Yusuf’s fatwa is confirmed in Zahira, Khulasa, and Bahr. I have not come across any scholar who says, ‘The fatwa is according to Abu Hanifa’s view.’ Therefore, it is wajib to act according to Abu Yusuf’s fatwa in terms of fatwa and judicial decision.” (See Raddul-Muhtar, 4/533-534 - also for more detailed information on this subject, see Beki Abdulaziz, İslam’da Modern Ticarî Meseleler, pp. 31-45).

Questions on Islam