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Qardh al-hasan (, transl. benevolent lending) is an Islam concept of interest-free lending. It is based on the principle of helping others without expecting a financial gain. However some Ulama deem it a form of interest-free loan (fungible, marketable wealth) that is extended by a lender to a borrower on the basis of benevolence (ihsan). Al-qardh, from a shari’a point of view, is a non commutative contract, as it involves a facility granted only for the sake of tabarru’ (donation).
Therefore, al-qardh al-hasan is a gratuitous loan extended to people in need, for a specified period of time. At the end of that period, the face value of the loan (asl al-qardh) is to be paid off. In other words, shari’a prohibits the stipulation of an excess for the lender, as it amounts to riba, whether the excess is expressed in terms of quality or quantity, or it is a tangible item or a benefit. However, it is permitted that the repayment of qardh (loan extinguishing) is made with an excess (tangible item, benefit, service, etc.) If such an excess is neither expressly stipulated nor implicitly pre-arranged (through collusion or tawatu’) in the contract of loan. (2025). 9780203745298, Routledge, Taylor & Francis Group. ISBN 9780203745298
One example is
If you loan to Allah, a beautiful loan ''tuqridu, He will double it to your (credit), and He will grant you Forgiveness ..(Qur’an 64(al-Tagabun):16–17.)
Qardh also appears in numerous hadith. In contrast to use in the Quran, none of the hadith in the collections of Sahih al-Bukhari, Sahih Muslim, Abu Dawud, Nasa'i, Ibn Majah, Tirmidhi, Muwatta, Musnad Ahmad, or Darimi contain the phrase qardh al-hasan. All use qardh without any qualifier.
A different and non-orthodox interpretation of the Quran's verses on qardh al-hasan (by M.O Farooq) is that the context of the verses does not "seem to have anything to do with qardh in general as business transactions in this world", but instead involves "the symbolic transaction between Allah and the believers". In these sorts of transactions believers can only give Allah loans, not gifts, because "Whatever we offer to Allah is ... treated as loan", since it is always returned, "doubled or even more".Maududi. op. cit., Vol. I, no. 267, 187; Abdullah Yusuf Ali, op cit., no. 275, 97; Muhammad Asad, op. cit. 54, no. 234; Irfan Ahmad Khan, Reflections on the Qur’an, Vol. I (Leicester: Islamic Foundation, 2005), 614. In contradiction to orthodox religious legal teachings that the Quranic verses prohibit Muslims from charging interest on business loans, Farooq notes that the verses "specify no detail whatsoever in regard to conditions or limitations, including whether qardh or qardh al-hasan must be without excess. On the contrary, qardh al-hasan, as a contract with God, consistently specifies an excess," (as the Quran talks of doubling the qardh hasan).
Qardh al-hasan supports the main principle of brotherhood. Also there are benefits such as the aid of the poor, establishing a strengthened relationship between poor and rich, the just distribution of national income between all citizens, removing caste differences and unemployment, and being an act with great reward at Resurrection.
In practice, the concept has proven difficult to successfully implement, due to a lack of a mechanism for identifying and monitoring proper use and due to competition with conventional banks.
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