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The government gives loans through banks that take a certain ratio for such service

Q: We live in Austria where the government allows us to borrow sums of money to assist start-up companies. We collect the money from a bank that charges us 1 % for postal, telephone, fax and other services. This sum which the bank charges us has nothing to do with the government loan. For instance, if we receive $ 1000, we will pay back the same amount in addition to 1 % for postal, fax, and telephone services and so forth, which (Part No. 11; Page No. 104) the bank will take in return for these services.The question is: Is this additional amount which the bank will take considered Riba (usury)? May Allah reward you with the best.


A: This percentage which the bank will take is Riba because it is, in fact, a return of the original loan along with a known increase. This involves both Riba Al-Fadl (usury of excess, selling an item for another of the same type, on the spot, but in excess) and Riba Al-Nasi'ah (usury of delay, conditional excess for delay of payment) both of which are prohibited and thus you must avoid any transactions involving them.May Allah grant us success and may Allah's Peace and Blessings be upon our Prophet, his family and Companions.


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