Paying some extra amount while repaying the loan amount

[Sardar Miyan]

However, the creditor (who deposits their savings) is entitled to receive their principle amount back. As already mentioned, in today's economy, currency seldom holds the same value over a period of time. Therefore, it can be argued that any interest payment that covers the rate of inflation is permissible as this allows for the creditors principle amount to be returned.
 ----------------------------------------------------------------------------------------------------
Bro JAI You have mentioned in your article( as mentioned by Sister Saba above) about off setting the interest with the Inflation do you mean it can be applied to RIBA ? Thanks

[Joseph Islam]

Wa alaikum assalam Sardar,

The argument was made in support for the need for justice and the Quran's instruction that one is entitled to their principal back (2:279). If one bag of sugar was lent, then the lender has the right to receive one bag of sugar in return. If one camel was given, then the lender is entitled to receive a camel back. If a car was given, then the lender is entitled to receive the same / similar car back.

However, if someone lent $1000 to someone and 30 years later gives the same $1000 back, then the lender would arguably be at a detriment as the currency is not likely to hold the same 'value / purchasing power' that it did 30 years ago.

Therefore, the argument was made that this 'offset' should be potentially considered carefully as compensatory when dealing with a depreciating commodity such as money so that the lender is not placed at a detriment.

In my humble view, I think it is fair argument that any inflation factor is carefully considered when agreeing a loan so that the lender is not placed at any detriment.

However, of course, if the currency for some reason becomes stronger, then the debtor should be able to benefit by paying less amount back in accordance to the 'value / purchasing power' of the currency.

I hope that helps, God willing,
Joseph

[Sardar Miyan]

This kind of paying extra or less based upon the Inflation or deflation is not given by Quran but as a common sense I suppose.

[Joseph Islam]

Yes brother Sardar.

In my humble view, the question that needs to be considered is thus:

God says that a lender is entitled to the principal back (amwalikum). This is according to the Quran (2:279).

Now, if one lends 1 bag of sugar and gives half back, does the lender get his principal back? As I am sure you will agree, clearly not. Similarly if a currency devalues over a period of time, does the lender get their principal back? If not, then what is the obvious answer to compensate the lender?

The Quran is not against best interpretation, best deduction or ijtihad.

039:018
"Those who listen to the Word (the Quran) and follow the best meaning in it / best of it (Arabic: fayattabi'una ahsanahu) those are the ones whom God has guided and those are the one's endowed with understanding (Arabic: Albabi)
 
039.055
"And follow the best of what is revealed to you from your Lord, before the penalty comes to you suddenly while you do not perceive!”

I hope that helps in some small way, God willing

Regards,
Joseph

[erwin.ariadi]

Salam all,

The real problem is in the current "fiat money" itself which creates an inherent "automatic inflation" within it. To understand how the contemporary "money" works is somehow very crucial.

Here is the brief explanation about the process of money creation :

https://www.youtube.com/watch?v=t5ayg3hbhoM

The Quran has explicitly mentioned "dinar" (3:75) and "dirham" (12:20) as real money, instead of the current fiat (read : fake) money.

I do believe that this is a very difficult situation, but at least we understand what is going on in our global economic system today.

Hope this helps.

Salam,

[Sardar Miyan]

The fact is that while repayment of our loans we have to take considerations of inflation of money as the loane you have taken has grown due to inflation as such you have to reimburse your loaned person for such inflationary  increase?please do not go to US system but simple inflation process. Thanks