Is the Bounce Back Loan Scheme (BBLS) Shariah Compliant?
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
The Bounce Back Loan Schemes are not Shariah compliant. A person seeking financing should seek alternative financing through Shariah compliant financing, non-interest products or lastly, seek financing with an initial complete 0% financing.
The Fiqh (jurisprudence of the answer):
The issue with the bounce back loan is that interest is payable from the initiation of the contract. The borrower is the principal debtor, but the government assumes the liability to repay the interest for the first 12 months. This is a problem as the borrower is party to a loan agreement wherein there is interest from the outset. The borrower being the principal debtor is originally liable to pay the interest, it is transferred secondarily to the government.
Further, from what I have seen, the accredited lenders are retail private high street banks. If the lender was a government-owned or national bank, the ruling would potentially be different to the above.
And Allah Alone Knows Best
Mufti Faraz Adam,
Executive Director, Amanah Advisors