Earning interest to pay off an interest bearing loan
Q: I have a brother and a sister. My brother has taken a loan from a bank and has to pay back the loan with interest. My sister wants to open a fixed deposit with the intention of giving the interest earned on the fixed deposit to my brother so he can pay off his own loan. Can she do it, even when my brother has enough income to pay off the loan himself?
A: Taking an interest bearing loan is Haraam and forbidden in Shariah. Severe warnings have been sounded in the mubaarak Ahaadith for those who get involved in the grave sin of interest.
Hazrat Jaabir (radhiyallahu ‘anhu) reports that Rasulullah (sallallahu ‘alaihi wasallam) cursed the one who consumes riba (interest), the one who feeds it to others, the one who records it (i.e. the transaction) and those who are witness to it (i.e. the transaction). Rasulullah (sallallahu ‘alaihi wasallam) also said, “All of them are equal (in the sin of interest).”
Hence, your brother should sincerely repent to Allah Ta'ala for taking an interest bearing loan and try his best to pay off the loan as quick as possible so that he will save himself from the curse of interest.
It is not permissible for your sister to open up an account with the intention of earning interest to help her brother pay for his loan. If she opens an account with the intention of earning interest, she will be sinful and become a victim of the curse of interest.
And Allah Ta'ala (الله تعالى) knows best.
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