The Supreme Court of Pakistan, in determining the applications and implications of the term “Riba” asked for assistance of religious scholars and other interested people of the country. For this purpose, answers to ten questions were sought. The fifth among these questions was:

The Government of Pakistan and some institutions under its control acquire loans by issuing bonds and certificates etc. and pay a fixed period-wise ‘profit’ to the holders of such securities. Does this profit fall within the definition of Riba?

My Reply to the question follows:

The return given by the Government of Pakistan and institutions under its control on loans acquired through the issue of certificates and bonds is:

• gain on a loan
• at a predetermined rate related to time (i.e. percent per annum).

In view of these two qualities the referred return, whether termed as “profit”, falls within the ambit of the term “Riba”.