Qard hasan
A benevolent loan repaid at face value with no return for the lender, often used for social and hardship lending.
Qard hasan is a benevolent loan: the lender provides funds and the borrower repays only the principal, with no stipulated return or benefit for the lender. It is used for social and hardship finance, microfinance, and staff or student loans, and some institutions run dedicated qard hasan funds. The borrower may choose to repay more at settlement, provided that it was not a condition of the loan.
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
QardA loan of money to be repaid in an equivalent amount; any benefit stipulated for the lender is riba.RibaAn increase over principal that Shariah prohibits: extra stipulated on a loan, or an unequal exchange of certain like-for-like goods.Islamic microfinanceSmall-scale Islamic finance for low-income households and micro-enterprises, using qard hasan, sales, leases or partnerships.SadaqahVoluntary charity given to people in need, beyond the obligatory zakat.