Shaikh Abdul-Muhsin al-Abbaad was asked:

Question:

We have in the country a governmental benefit which is providing monetary loans to the youth. These loans are repaid in installments with 1% interest [so what is the ruling on this]?

Answer:

“Loans that are with interest are prohibited whether the interest is a little or a lot. Yes”.

[Sharh Sunan Ibn Majah no. 292]

Translated by

Faisal Ibn Abdul Qaadir Ibn Hassan
Abu Sulaymaan