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Ethio telecom offer credit to his customer with rate of facility fee repayed at fixed date and also fee with daily charge. Is there a diffrence between the two term mean facility fee(service charge) and daily fee? Is that both are interest and prohibited such that i may in state of RIBA

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  • “Fee with daily charge” looks a whole lot like simple interest to me…
    – RonJohn
    Sep 17, 2023 at 21:13
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    @keshlam It is a religious question in the sense that Islam prohibits charging (or paying) interest.
    – D Stanley
    Sep 18, 2023 at 14:02
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    You might get better answers on a Stack focused more specifically on Islamic law.
    – keshlam
    Sep 18, 2023 at 19:32
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    As far as I'm aware (coming from a country with a large Muslim population, but not being Muslim myself), these fees are a sort-of work-around for companies which would like to charge you interest (and may do so to non-Muslim customers), but want to remain at least technically compliant with sharia law.
    – brhans
    Sep 18, 2023 at 22:14
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    Should absolutely not be closed. This is about money.
    – gnasher729
    Sep 20, 2023 at 18:44

2 Answers 2

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“RIBA” in the Muslim religion is charging excessive interest, say 5% a month. Which would be illegal for example in totally non-Islamic German law as well. The difference is that Islam doesn’t set a fixed rate for what is legal and what is illegal, making basically any interest impossible.

Two things happen: First, by calling it a “fee” it’s not interest anymore and therefore becomes legal. Unless the fees are excessive. Ask any non-Muslim friend whether they think the fees are excessive. For example if your friend received a mortgage paying five percent interest a year, you can’t take that mortgage because it charges interest. A mortgage charging a five percent per year “fee” would be fine. A mortgage charging a five percent per month fee would be usury, and a Christian friend would call it that.

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They are different names for essentially the same thing - a service fee for having a line of credit. For example, if you make use of an overdraft, the bank might charge a daily fee for the use of the overdraft facility on the account.

The important thing is that these fees are not interest. Interest is calculated as a percentage of the amount borrowed. This is a fixed fee for a service.

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    In this case the fees indeed appear to be a percentage of the amount borrowed.
    – Philipp
    Sep 21, 2023 at 7:55

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