Have you use Qard Hasan (Benevolent Loan), look what may distort/tarnish how accessible this type of financing!

1. Use of Qardh Hasan in Financing
The use of qardh hasan in a correct manner and acceptable by the Shari’ah, would definitely
benefit contracting parties. However, if it is inappropriately used, it would potentially create
problems, which may tarnish the image of the Islamic financial system. Among the issues that
may arise are:
1. Whether qardh hasan, in its true meaning, implies the need to be repaid or otherwise;
and
2. Since Islamic banking institutions offer financing by utilizing customers’ deposits who
expect returns, the use of qardh hasan as a mode of financing is deemed to be
inappropriate. This is because qardh hasan is not meant to generate profit, rather it is
benevolent or tabarru`at by nature.
Resolution
The Council, in its 51st meeting, held on 28th July 2005 / 21st Jamadil Akhir 1426, resolved that
the word ‘hasan’ should be taken out after the word ‘qardh’, implying that qardh is an obligation
for borrowers to repay their loan to lenders.
Issuer: Shariah Advisory Council, Central Bank of Malaysia.