Are we allowed to give or receive money as interest if we really need to?

The Holy Quran has forbidden interest. When the Promised Messiah ^as was repeatedly asked about how it is seemingly impossible to function in society without it, he said that no commandment is impossible and that even if Allah had forbidden drinking water from the earth then he would provide it from the sky. He ^as gave the example of how business people lie when selling their products and how workers take bribes, and all present the same excuse that they cannot survive otherwise. If all of these excuses are combined, then the conclusion is that the book of Allah should not be obeyed because it is not possible to survive while doing so. The reality is that Allah Almighty Himself opens ways for believers (Fiqhul-Masih, p. 321–322).

The giving and receiving of interest is prohibited in Islam. The debate on permissibility only arises when deciding if something is actually interest or not. Mortgage is an example. Since it does not come entirely under the definition of interest, it is permitted. If mortgage was interest, it would not be allowed no matter how badly people said they needed it. Hadrat Khalifatul-Masih V ^aba said:

Here houses are sold on mortgage. In this, as the Promised Messiah ^as said, some financial systems have become so convoluted that there is a need for a new reasoning. The Jama‘at generally allows it, and previous Khulafa’ have been allowing that a house be purchased on mortgage. According to me, if the outgoing mortgage is about the same as rent would be, it does not matter.

(Friday Sermon, June 15, 2007)

In a mortgage, the bank does not give money like student loans or business loans; it essentially buys the house for you. Also, in a mortgage, the bank keeps a lien on the house and they can repossess it. In this way, the interest is more like rent that a person is paying to the bank to live in the house for 30 years. The Jama‘at permission for mortgage is not because there is a dire need for it, the  permission is because it is a gray area and it does not come under the definition of interest. If it were considered interest, then it would not be allowed for any justification. The debate on permissibility is never on how badly someone needs interest; the degree of a person’s need is irrelevant. The debate is only on whether something is technically interest or not.

When determining if a transaction is interest or not, we look at what the nature of the transaction is. For example, during the time of the Promised Messiah ^as, the al-Badr newspaper would have subscribers pay ahead of time, but it charged more for those who promised to pay afterward. Since there was added effort and expense in pursuing and collecting payment afterward, the extra charge was to recoup those losses. The Promised Messiah ^as was asked if this came under interest. He ^as replied:

In my opinion, this has nothing to do with interest. It is the right of the owner to set the price he wants, especially since there is a loss in those who pay afterward. If a person wants to buy the newspaper then he can pay ahead of time as well, it is his choice.

(Fatawa Hadrat Masih Maud ^as, p. 216–217)

If we indirectly come in contact with interest based money, then it is not prohibited. Hadrat Musleh Mau‘ud ^ra said:

If a job requires advertising interest, it is not permissible. To work as a clerk or in accounting is permissible.

(Farmudate Musleh Mau‘ud, p. 309)

If a person is running a business and has to deal with and trade with the interest based money and property of others, it is not prohibited as long as the money received and given evens out. Any surplus must be given for the work of the propagation of Islam (Siratul-Mahdi, vol 2, p. 401–405, Narration #442).

Such a person gets involved in the interest of others, not his own personal interest. The only interest that is not prohibited in business is dealing with the interest-based money of others that is outside of a person’s control, when the money a person invests is used in interest by means outside of his choice. However to choose to use interest ourselves is completely forbidden. For a person to choose to take an interest based loan for business is not allowed because that is his own choice.

The Quran prohibits both giving and receiving interest. Concerning the interest that we have no choice but to receive from the bank, the Promised Messiah ^as said that we cannot spend it on ourselves or even give it as alms, it can only be actually the propagation of Islam (Fatawa Hadrat Masih Mau‘ud, p. 209). The Holy Prophet ^sas taught such care in avoiding interest that he cautioned against even subtle forms of interest. The Holy Prophet ^sas said:

If anyone of you borrow something, then he gives (the lender) a gift or gives him a ride on his riding-beast, he should not accept the gift or the ride, unless they used to treat each other in that manner beforehand.

(Sunan Ibn Majah, vol. 3, Book 15, Hadith 2,432)

Hadrat Musleh Mau‘ud ^ra said:

If a person is dying of starvation and he can find nothing but the flesh of swine, then it is permissible for him to eat. However, interest is not permissible in any way. From this you can estimate how prohibited interest is. 

(Farmudate Musleh Mau‘ud, p. 307)