Reading and thinking about debt / loan, I come to the conclusion so far that it is highly dangerous for one's wealth as well as for ethics to deal in it either as a lender or as a borrower as far as Muslim and Islam is concerned and this is best for the mankind as a whole as Allah (SWT) says that "And this was the legacy that Abraham left to his sons and so did Jacob; "O my sons! Allah hath chosen the faith for you; then die not except in the faith of Islam." Aya 132 Sura Al-Baqara
Let us discuss, first, why and how the debt is harmful for one's wealth. First, it is not possible to lend someone without any benefit whether pecuniary or else, Islamic or non-Islamic. So the discussion of usury / interest / mark-up / profit is irrelevant. It will be present in any transaction involving debt; pure loan transaction, credit based trading transaction, Islamic debt "Murabaha", "Ijara" etc. Second, in lending business there shall always be risk of default because future is an unknown entity, anything can go wrong beyond our most sophisticated analysis or our wildest dreams. As a Muslim, we have complete faith that what is said in Quran, is absolutely true.
"O ye who believe! devour not usury doubled and multiplied; but fear Allah; that ye may (really) prosper. " Aya 130 Sura Al-i'Imran
"That which ye lay out for increase through the property of (other) people will have no increase with Allah: but that which ye lay out for charity seeking the Countenance of Allah (will increase): it is these who will get a recompense multiplied." Aya 39 Sura Ar-Rum
"Allah will deprive usury of all blessing but will give increase for deeds of charity: for He loveth not creatures ungrateful and wicked." Aya 276 Sura Al-Baqara
"O ye who believe! fear Allah and give up what remains of your demand for usury if ye are indeed believers." Aya 278 Sura Al-Baqara
"If ye do it not take notice of war from Allah and his Apostle: but if ye turn back ye shall have your capital sums; deal not unjustly and ye shall not be dealt with unjustly." Aya 279 Sura Al-Baqara
"That they took usury (interest) though they were forbidden; and that they devoured men's substance wrongfully; We have prepared for those among them who reject faith a grievous punishment." Aya 161 Sura An-Nisa
"If the debtor is in a difficulty grant him time till it is easy for him to repay. But if ye remit if by way of charity that is best for you if ye only knew." Aya 280 Sura Al-Baqara
Two commandments from Allah (SWT) are very clear from above referred verses from Quran. First, usury/ interest/ mark-up/ profit on loan is forbidden, stay away from it otherwise take notice of war from Him and His Messenger (PBUH). Second, grant time to debtor in distress till he is able to pay or write off debt by way of charity. Both the orders are very difficult to obey if not impossible. How can one lend to someone without any benefit explicit or implicit? How can one give unlimited time to debtor, even in distress, for payment of his debt?
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