Qard Rail

Interest-free loan contract endpoints for benevolent lending in Islamic finance.

Overview

The Qard rail provides:

Interest-free loan (Qard Hasan) contract creation and management
Repayment schedule generation with zero interest
Service charge handling (administrative costs only)
Grace period and extension workflows

Qard is a benevolent loan where the lender provides funds to the borrower on the condition that the same amount is returned, without any increase. It is considered an act of charity and goodwill in Islamic finance, and any stipulated excess over the principal is prohibited as it constitutes Riba (usury).

Qard Hasan (beautiful loan) is encouraged in Islam as a means of social welfare. Islamic financial institutions use it for microfinance, emergency lending, employee advances, and overdraft facilities. The lender may charge a reasonable service fee to cover administrative costs, provided the fee is not linked to the loan amount or duration.

The borrower may voluntarily give a gift to the lender upon repayment, but this cannot be stipulated or expected as a condition of the loan. The lender must not derive any direct or indirect benefit from the loan beyond the return of the principal.

Endpoints

Create Qard Contract

POST /v1/rails/qard/contracts

const contract = await iof.qard.create({
  description: "Emergency microfinance loan",
  loan_amount: 5000,
  currency: "USD",
  borrower_id: "cpty_borrower",
  lender_id: "cpty_institution",
  repayment_terms: {
    installments: 12,
    frequency: "monthly",
    grace_period_months: 3,
  },
  service_fee: 50,
});

Response:

{
  "id": "qrd_xyz",
  "type": "qard",
  "status": "DRAFT",
  "loan_amount": 5000,
  "repayment_amount": 5000,
  "service_fee": 50,
  "currency": "USD",
  "repayment_schedule": {
    "installments": 12,
    "installment_amount": 416.67,
    "frequency": "monthly",
    "grace_period_months": 3
  },
  "created_at": "2024-01-15T10:30:00Z"
}

Get Qard Contract

GET /v1/rails/qard/contracts/:id

List Qard Contracts

GET /v1/rails/qard/contracts

Execute Qard Contract

POST /v1/rails/qard/contracts/:id/execute

Record Repayment

POST /v1/rails/qard/contracts/:id/repay

Grant Extension

POST /v1/rails/qard/contracts/:id/extend

Contract Status

Status	Description
`DRAFT`	Contract created, pending review
`PENDING_SHARIAH_REVIEW`	Awaiting Shariah board approval
`SHARIAH_APPROVED`	Approved by Shariah board
`ACTIVE`	Loan disbursed, repayment in progress
`IN_GRACE_PERIOD`	Within grace period, no payments due
`COMPLETED`	Loan fully repaid
`WRITTEN_OFF`	Loan forgiven or written off

Shariah Compliance

No interest, markup, or profit may be charged on the loan amount
The borrower must return exactly the same amount borrowed (no excess)
Service fees must cover only actual administrative costs, not linked to loan size or duration
Late payment penalties, if any, must be donated to charity (not retained by the lender)
The lender may not stipulate any benefit as a condition of the loan
Voluntary gifts from the borrower upon repayment are permissible but not required

Webhooks

Event	Description
`qard.contract.created`	Contract created
`qard.contract.executed`	Loan disbursed
`qard.repayment.received`	Repayment installment paid
`qard.extension.granted`	Repayment extension granted
`qard.contract.completed`	Loan fully repaid

Standards

Next Steps

Wadiah Rail - Safekeeping deposits
Kafalah Rail - Guarantee contracts
Contracts Rail - General contract management