Title: Can I pay interest from subsidy?

Question: I want to take a loan from scheme Swami Vivekananda Rojgar Yajona by government of India. In the scheme 30 % of the loan amount is subsidy, given by govt. and the rest portion that is 70% is to be paid @9% interest by me. What I thought, I will pay interest from that 30 % subsidy amount. To avoid interest directly. Let me know my thinking is legal from Islam?

Answer ID: 153840Posted on: Aug 31, 2020

Bismillah hir-Rahman nir-Rahim !

(Fatwa: 1240/1181/SD=11/1438)

In the above mentioned case, it is lawful to take loan which is received from the government on condition that the paid amount is not more than the amount given by the government, i.e. the interest which is taken on the loan is not more than the subsidy given by the government. Thus if the interest of loan is paid from 30% subsidy then it shall be allowed to take loan through this scheme. (Nizamul Fatawa, vol. 1, p. 269.)