In brief
Qard hasan is a benevolent loan, repaid in the same amount, with no agreed surplus whatsoever. The Qur’an presents it as a loan made to Allah (al-Baqarah 2:245). Only the actual costs of the service may be charged (International Islamic Fiqh Academy, resolutions 13 and 108).
An act of kindness
The Qur’an speaks of the one who lends Allah “a goodly loan”, which Allah will repay to him many times over (al-Baqarah 2:245, al-Hadid 57:11), and asks that a debtor in difficulty be given extra time, adding that writing off the debt is better still (al-Baqarah 2:280).
The rules
- The loan is repaid in the same amount and in the same currency; it is not indexed to prices (resolution 42 (4/5)).
- No benefit may be agreed in the lender’s favour: that would be riba.
- The lender may charge the actual costs of the service (arrangement, administration), unrelated to the amount or the duration (resolution 13 (1/3), restated by resolution 108 (2/12)).
- The borrower may, of his own accord, repay more at the time of repayment, if nothing was agreed.
Today
- Current accounts are legally loans from the client to the bank, repayable at any time, and earn nothing at an Islamic bank (resolution 86 (3/9)).
- Mutual-aid funds and rotating savings circles between relatives and friends rest on lending without a surplus: see rotating savings circles.
- The Academy asks Islamic banks to set up qard hasan funds so that people in need do not have to resort to tawarruq (resolution 179 (5/19)).
- A zero-rate public loan may fall under the same principle: see zero-interest loans.
The verses
مَّن ذَا ٱلَّذِى يُقْرِضُ ٱللَّهَ قَرْضًا حَسَنًا فَيُضَٰعِفَهُۥ لَهُۥٓ أَضْعَافًا كَثِيرَةً وَٱللَّهُ يَقْبِضُ وَيَبْصُۜطُ وَإِلَيْهِ تُرْجَعُونَ ٢٤٥
Who is it that would loan Allāh a goodly loan so He may multiply it for him many times over? And it is Allāh who withholds and grants abundance, and to Him you will be returned.
وَإِن كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَىٰ مَيْسَرَةٍ وَأَن تَصَدَّقُوا۟ خَيْرٌ لَّكُمْ إِن كُنتُمْ تَعْلَمُونَ ٢٨٠
And if someone is in hardship, then [let there be] postponement until [a time of] ease. But if you give [from your right as] charity, then it is better for you, if you only knew.
مَّن ذَا ٱلَّذِى يُقْرِضُ ٱللَّهَ قَرْضًا حَسَنًا فَيُضَٰعِفَهُۥ لَهُۥ وَلَهُۥٓ أَجْرٌ كَرِيمٌ ١١
Who is it that would loan Allāh a goodly loan so He will multiply it for him and he will have a noble reward?
Frequently asked questions
Can one ask for security on a qard hasan?
Yes: a pledge or a guarantor is permitted to secure repayment, as long as it gives the lender no benefit.