For a true follower of Islam the Holy Quran and ahadith are the primary source of guidance. The Shariah, which is the religious law of Islam, is based on the Holy Quran and ahadith.
Therefore, in order to clearly understand the concept of loan in Islam we will have to first see what the Quran and ahadith say in this context:
O you who believe, fear Allah and give up what remains (due to you) of interest, if you should be believers. (TMQ-2:278)
And if you do not, then be informed of a war (against you) from Allah and His Messenger. But if you repent, you may have your principal (thus) you do no wrong, nor are you wronged. (TMQ-2:279)
And if someone is in hardship, then (let there be) postponement until (a time of) ease. But if you give (from your right as) charity, then it is better for you of you only knew. (TMQ-2:280)
Zakah expenditures are only for the poor and for the needy and for those employed to collect (zakah) and for bringing hearts together (or Islam) and for freeing of captives (or salves) and for those in debt and for the cause of Allah and for the (stranded) traveler- an obligation (imposed) by Allah. And Allah is Knowing and Wise. (TMQ-9:60)
..after any legacy he may have bequeathed, or debt (hath been paid) (TMQ-4:11)
The Holy Quran has condemned interest/usury in the strictest possible way. In my next post, I shall discuss about the points that can be deduced from the above mentioned Quranic verses.
Keep Me In Your Prayers.