Q: In our time, there are wealthy Muslims to take out loans from the bank for tens of millions of rands for the purpose of business, e.g. constructing an apartment block. Or taking out a mortgage for buying a home. Please advise:
(1) If the amount loaned exceeds their Zakaat asset value, does that mean these Muslims do not have to pay Zakaat, and that they are also eligible to receive Zakaat?
(2) Likewise, is it better for them to use money to pay off debts or Nafl Sadaqah/Lillah projects?
A:
1. If the loan amount exceeds all the wealth and assets of a person, then such a person is regarded as a poor person in shariah as he owes more than he owns. Hence, such a person is not obligated to pay zakaat, and if someone gives him zakaat, the zakaat will be discharged.
However, it should be borne in mind that it is not permissible for one to take interest bearing loans from the bank. Taking interest bearing loans is prohibited and haraam in shariah. Severe warnings have been sounded in the Mubaarak Ahaadith for the person who gets involved in the grave sin of interest.
Hazrat Jaabir (radhiyallahu ‘anhu) reports that Rasulullah (sallallahu ‘alaihi wasallam) cursed the one who consumes riba (interest), the one who feeds it to others, the one who records it (i.e. the transaction) and those who are witness to it (i.e. the transaction). Rasulullah (sallallahu ‘alaihi wasallam) also said, “All of them are equal (in the sin of riba).”
2. They should refrain from taking interest bearing loans as this earns the wrath of Allah Ta'ala. If they had taken out such a loan, then they should pay off the loan as quickly as possible so that they do not continue to remain in this grave sin. Thereafter, they may give charity if they wish.
And Allah Ta'ala (الله تعالى) knows best.
Answered by:
Checked & Approved: