A borrower has to pay back the same amount of loan regardless of inflation

8-2-2010 | IslamWeb

Question:

Assalam alaikum, My uncle (father's brother) helped my father to buy a flat in Bombay by
paying full amount of Rs.22,000/- in 1970. He told my father to consider half amount of
flat (Rs.11,000/-) as a gift and balance half amount as a loan. My father returned
Rs.3000/- in three years when a dispute came between them regarding my grandfather's property and my father stopped paying him balance amount. After few years my uncle died. Now my uncle's son is demanding balance amount in terms of current property rate. At present the price of flat is Rs.70,00,000/-, so how much loan amount to be returned to him?, Jazakallah

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Answer:

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

 

A loan has to be repaid in the same amount (as it was taken) and not according to its current value, as was clarified in Fatwa 87651.

Therefore, you are obliged to repay the same amount that your uncle had lent to your father. If your father had returned Rs 3,000 then you should return Rs 8,000 only, and you are obliged to return it to the heirs of your uncle.

Allaah Knows best.