Is it permissible for a guardian to loan out the wealth of an orphan?
Chapter on Selling the Musarrah (Animal with milk retained in udder)
Al-Mughni
Book of Sales
Primary text
Loaning the wealth of an orphan is impermissible if there is no benefit or interest (hath) for the orphan in the transaction. If the guardian can trade the wealth or acquire real estate for the orphan's benefit, loaning it is prohibited because it deprives the orphan of that gain. However, if trade or real estate acquisition is not possible, and the loaning constitutes a benefit for the orphan, it is permissible. Imam Ahmad stated that the wealth should not be loaned out of mere goodwill or affection for the borrower, but rather out of foresight and compassion, as Ibn Umar acted. The loaning is justified when it serves the orphan's interest, such as transferring wealth to another city for safekeeping against risks like loss or theft, or loaning goods like wheat that are prone to spoilage or depreciation, thereby preserving their value. Such loans are permitted because they yield a benefit for the orphan, analogous to trading the wealth.
Supporting text
It is impermissible to loan the wealth if the sole intention is to benefit the borrower or satisfy their need, as this constitutes an unauthorized donation of the orphan's money, invalid like a gift. Furthermore, if the guardian intends to travel, loaning the orphan's money is preferred over depositing it (wadia'ah) with someone trustworthy, because a deposit does not guarantee return if lost, whereas a loan made for the orphan's benefit implies security. If a trustworthy borrower cannot be found, depositing the money is permissible due to necessity. Even if the guardian has the option to loan but chooses to deposit, the deposit is valid, and the guardian is not liable, as depositing might be deemed more beneficial than lending in certain circumstances, meaning the guardian is not negligent.