Zaid is a
South African employed in Saudi Arabia. He requests a loan of R 50 000.00 from
Hafeez with an agreement to repay the loan within six to eight months. The loan
is granted to Zaid by Hafeez. When Zaid gets the accumulated amount, he
notifies Hafeez, and Hafeez requests that the amount be paid into a Saudi
Arabian account in Riyals. However, when Zaid received the loan, the Riyal was
at R 3.54, to
the South African Rand, and when Zaid makes the transfer in Riyals to Hafeez
the rate of the Riyal was at R 3.98 to the South African Rand. How should the
loan repayment be calculated?

Answer: 

In Shariah, as far as possible, loans must be resettled in the same denomination/currency as they were lent. (Shaami Vol. 3 Pg. 848). In the enquired case, as the loan was received by Zaid in Rands, then Zaid will be obliged to pay the debt in Rands, i.e. the same amount of R50000.00. He is not obliged to pay the amount back in Riyals.

If for some reason, Zaid cannot repay the debt in Rands, and he accedes to Hafeez’s request of paying back in Riyals, he will pay the equivalent amount in Riyals taking into account the current rate of exchange on the day of settlement/repayment, which in the enquired scenario would be R3.98 and not R3.54. (Shaami Vol. 5 Pg. 165)

AND ALLAH TA'AALA ALONE IN HIS INFINITE KNOWLEDGE KNOWS BEST

ANSWERED BY: MOHSIN KHAN 

CHECKED AND APPROVED BY: Mufti Muhammed Saeed Motara Saheb D.B. 

Islamic Date:٢٣ شوال ١٤٤٠  English Date: 27 June 2019