Is any loan conditional upon receiving an increase (benefit) from the borrower forbidden?
Chapter on Loan (Qard)
Al-Mughni
Book of Sales
Primary text
Every loan that stipulates an increase for the lender is forbidden, without dispute. Scholars, including Ibn al-Mundhir, agreed that if a lender stipulates an increase or a gift and receives it, taking that excess constitutes Riba. Narrations from Ubayy ibn Ka'b, Ibn Mas'ud, and Ibn Abbas explicitly forbid a loan that draws a benefit (Qard Jar Manfa'ah). This is because a loan is a contract of facilitation and piety; stipulating an increase removes it from its intended purpose. This applies whether the excess is in quantity, quality (e.g., lending broken currency to receive whole coins), or in terms of the location of repayment.
Supporting text
There is a difference of opinion regarding stipulating repayment in another city. If carrying the money incurs cost (mu'unah), it is not allowed as it constitutes an increase. However, if there is no cost of transport, some scholars permitted it, citing the practice of companions like Ali, Ibn Abbas, and Ibn Zubayr. A specific dispute exists regarding stipulating that the repayment be documented by a bill of exchange (safṭajah); some jurists prohibited this as an increase, while others permitted it as a mutual benefit. Furthermore, if a trustee lends the orphan's money to another city to profit from the risk of travel, the sounder opinion is that it is permissible as it is a mutual benefit without harm.