The Council reviewed the letter submitted to His Excellency the President of the General Administration of Scientific Research, Fatwa, Call, and Guidance, from the owners of industrial projects, regarding the Saudi Industrial Development Fund taking 2% of what it lends them as a fee for project financing assistance. It also reviewed the letter from His Excellency the Minister of Finance No. 98/3178 dated 29/6/1398 AH, to His Excellency the President of the Council of Ministers, stating that what the Fund charges as fees is not for the loans, but rather a small part paid by the borrower in exchange for what the technical specialists do in studying the industrial project, both technically and financially, and the consultations and other services they provide, which benefit the project owner and help ensure the success of their project. This incurs significant financial costs for the Fund. The Council also noted what was stated in paragraph (d) of Article Two of the contract concluded between the Fund and the owners of industrial projects, a copy of which is attached to the transaction, that the borrower agrees under this contract to pay the Fund unconditionally a financing assistance fee at a rate of 2% (two percent) annually, calculated on the outstanding principal amount of each loan.
After studying the subject and discussing it, and exchanging opinions on it, the Council decided by majority as follows:
First: These fees are explicit usury; as they are in exchange for what the Saudi Industrial Development Fund has disbursed from the loan to the project owner, as stated in paragraph (d) of Article Two of the contract concluded between the parties. If they were in exchange for the services provided by the technical specialists, they would vary according to the difficulties of the technical and financial studies conducted by the specialists, and they would decrease gradually as the loan amount is repaid.
Second: If those with insight and expertise assess the efforts of the technical specialists in conducting technical and financial studies for the benefit of the project, the Saudi Industrial Development Fund may charge a fee for these studies or part of it. If the Fund waives this fee as assistance to the project owner, it is more appropriate.
And with God's success, may peace and blessings be upon our Prophet Muhammad, his family, and his companions.