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    Friday, March 15, 2002 11:14 PM

Fatwa Council tightlipped over decision on PTPTN interest

5:13pm Mon Mar 11th, 2002
Yap Mun Ching,Malaysiakini

The National Fatwa Council today said it has decided on the validity of the four percent interest charged on higher education loan repayments but will keep the decision confidential pending discussions with the loan provider.

The Council’s chairperson Dr Ismail Ibrahim said the result of discussions among member mufti (religious leaders) will be shared with National Higher Education Loan Fund (PTPTN) officials at the earliest opportunity.

“Islamic law says that a loan can be associated with a true service cost,” said Ismail during a press conference at Pusat Islam Malaysia in Kuala Lumpur.

However, he said it was uncertain if the four percent was the actual service cost of the PTPTN or whether it incorporated a premium interest.

“We do not know if this is entire service charge since the loan capital varies,” he added.

Islamic law forbids the charging of interest as a form of income. However, creditors are permitted to use the concept of ‘interest’ to recoup administration and service costs.

Service and administrative costs

When contacted, assistant manager of PTPTN’s Collection Unit Abdul Murat Abdul Wahab said the ‘interest’ was intended to cover service and administrative costs.

Murat said the interest charged had always been applicable to all loans since the fund’s inception.

“It was stated in our Act and those accepting loans were aware of the interest conditions,” he said.

He added the fund differs from other Islamic loan schemes which are assessed based on different methods.

The PTPTN was set up in July 1997 to provide financial assistance to students at local universities.

The fund disburses between RM6,500 to RM20,000 per year to students who qualify depending on their subject of study.

In recent years, several student organisations have protested against the imposition of the interest which they feel is too high and burdening.

Human cloning wrong

In an unrelated matter, the National Fatwa Council said the practice of human cloning was haram (forbidden) under the Islamic law.

“There are 11 scriptures in the Quran which state that man is the result of husband and wife relations,” said Ismail.

He added human cloning is opposed to the religious concept of human existence as it was not the result of sexual relations.

Ismail also drew distinctions between the council’s views with regard to cloning and artificial insemination.

“(Cloning) is different from a test tube baby because (the latter) results from a sperm and an egg originating from married couples,” he said.


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