Benevolent loan as a social service in islamic banks and the major jurisprudential issues surrounding it: A case study on the "Hajji" loan

Abstract

This study aims to highlight the social dimension of Islamic banking activities by focusing on the Qard Hasan (benevolent loan) service, explaining its nature, and examining the legality of charging a commission for its management. It also reviews the Sharia-compliant regulations related to the costs imposed on borrowers by those who grant the loans. Additionally, the study addresses the Islamic ruling on securing loans and sheds light on the experience of the Algerian Popular Credit Bank (CPA) in implementing the Hajji Qard Hasan model.

The study found that banking services range from commercial to social, with the Qard Hasan service being one of the most prominent manifestations of the social responsibility of Islamic banks. It also revealed a jurisprudential disagreement regarding the permissibility of taking a commission on such loans, with some scholars allowing it under strict Sharia conditions. The study further showed that the Algerian Popular Credit Bank offers the Qard Hasan without any financial compensation, provided that the loan is secured through a Takaful insurance system, which complies with Sharia principles, unlike commercial insurance, which is unanimously prohibited by scholars.