Ruling on electronic saving committees or group contributions

5-11-2023 | IslamWeb

Question:

In Pakistan, there is a tradition of participating in savings committees or group contributions. Taking this tradition into the digital realm, an app called Oraan has introduced the service of Online Committees. This service manages everything from collection to payouts, all within the app itself,But they charge a fee called service fee for early payouts. For example if 10 people are contributing 10000/- each month. And I am getting the first payout there is monthly service fee of 1500/- . So each month, I’ll pay an installment of 10000/- plus 1500. But my payout will be 100000(one lac). Is this Sood/ interest?

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Answer:

All perfect praise be to Allah, The Lord of the Worlds. I testify that there is none worthy of worship except Allah, and that Muhammad is His slave and Messenger.

The method of operation of this application is similar to the operation of electronic associations or committees, and it is not free of suspicion of usury. There is a Sharee'ah problem regarding the variation of fees deducted from individuals. The variation in these fees, depending on the difference in roles within the association, takes it beyond being just administrative expenses or a fee for service. Otherwise, it becomes equal in all roles, and the excess amount in the fees of the first role and those following it makes the increase like a benefit in exchange for the proximity of the borrowing time. It is not valid for the loan to yield a benefit to anyone other than the borrower, whether the lender or someone else.

Al-Hattaab al-Maaliki said in Tahreer al-Kalaam fi Masaa'il al-Iltizaam: “The first section - meaning the section by which the loan is not valid - is everything that results in a benefit to someone other than the borrower, whether it accrues to the lender or to someone other than the lender. So, every condition that leads to a benefit for someone other than the borrower makes the loan invalid.”

Allah knows best.