The Ramadan loan is a Halal financing solution that is offered to Muslims during the sacred fasting period.
The role of the Ramadan loan is to make Muslim consumers aware that the month of Ramadan is not only about fasting, but respecting the way of consuming in terms of financing.
Ramadan financing is not, as one would think, a means of making even more the fasting consumers generate more debt.
Ramadan loan is often offered in Muslim countries in this sacred period where Muslims have to deal with additional expenses and Islamic banks adopt at this time an educational exercise to teach them that any funding is not Haram provided that principles of Islamic finance are applied.
The purpose of the Ramadan loan is to allow Muslims during this period to consume but in an ethical manner.
The funding for Ramadan will prevent the Muslim who applies the religious obligations of the holy month from using financial instruments contrary to Islamic Sharia.
The Ramadan loan is well-established in countries where Islamic finance is an integral part of the financial markets and where a full range of Halal financial products are offered.
The Islamic ethic sees no compatibility between fasting while praying while borrowing money that the Muslim does not know the origin.
The funding during the month of Ramadan is based on the principles of Murabahah and Mudaraba that apply to the following Muslim financial products:
If the Ramadan loan is not available in the country of the Muslim who is fasting, he will be able to turn to ethical loan agencies even if they are not Islamic, at least he will thus opt for an ethical financing solution rather a conventional financing with Riba.