Tiered Administrative Fees on Sharia-Labelled Loans

Lately, there have been more options for borrowing money besides banks. One of them is Sharia-labelled Savings and Loan Cooperatives (KSP), a phenomenon that should genuinely be welcomed, as it opens up financial access for communities not yet reached by formal banking services. However, there is one thing we need to examine closely. Some of these institutions claim to be free of riba (usury), yet simultaneously impose administrative fees that increase in proportion to the loan amount. It is reasonable for this to raise a question: is such a pattern truly permissible under Islamic rules, or does it potentially fall into the category of riba merely under a different name? This article does not intend to blame anyone, but rather invites us to think more clearly about the issue. What is Qardh and Why is it Important? In Islam, a loan is called Qardh. And fundamentally, a loan is meant for helping others (tabarru’), not for seeking profit (tijarah). This means that anyone lending money should not take any profit simply because they have lent it, no matter how small. This is affirmed in a well-known fiqh principle: ‘Every loan that brings benefit to the lender is riba.’ However, it must also be understood that scholars do not prohibit all types of fees. Administrative fees that truly reflect the institution’s real expenses, such as document printing and verification processes, are basically justifiable, provided the amount is reasonable and not excessive. So, What is the Problem with Admin Fees that Increase with the Loan Amount? Imagine this: you borrow Rp 3,000,000 and are charged an admin fee of Rp 300,000. Your friend borrows Rp 100,000,000 and is charged an admin fee of Rp 2,000,000. Logically, the administrative process is more or less the same: data input, verification, document printing. So why is the fee so different? This is where the question lies that needs an honest answer. Indeed, there is an argument that can defend this pattern: larger loans usually require a stricter verification process, the risk borne by the institution is higher, and the operational responsibility is greater. This argument makes sense and cannot simply be ignored. But on the other hand, if the difference in admin fees is very large while the administrative work is not significantly different, we need to ask: can the excess fee still be called a legitimate service charge (ujrah), or has it essentially become a profit derived from the money lent? This question cannot be answered just by looking at the numbers. The real cost structure borne by the institution must be examined more deeply. What Does the DSN-MUI Fatwa Say? There is one relevant fatwa to consider, namely DSN-MUI Fatwa No. 44/DSN-MUI/VIII/2004 on Multi-Service Financing. One of its points states: ‘The amount of ujrah or fee must be agreed upon at the outset and stated in a nominal amount, not in a percentage.’ Simply put, this fatwa recommends that service fees be set from the start in a fixed and unchanging figure, not in a percentage that will grow larger with the transaction value. If linked to the tiered admin fee pattern, it is reasonable to then question whether this pattern is aligned with or potentially deviates from the spirit of the fatwa. But it should be noted: this fatwa was originally intended for the context of multi-service financing, not specifically for loans (Qardh). Therefore, its application must be done carefully and cannot simply be generalised. Riba That is Not Visible: Riba Khafi Ibn Qayyim al-Jauziyyah, a classical scholar whose thoughts are still widely referenced today, once discussed what he called riba khafi, or hidden riba. The idea is that there are practices which outwardly appear valid and do not use the word ‘interest’, but when traced further, their substance could be problematic under sharia. Well, this admin fee pattern that follows the loan nominal needs to be contemplated within that framework. Not to immediately condemn it as riba khafi, because reaching that conclusion requires a much deeper analysis: what is the intention behind the contract, what are the actual operational costs incurred, and what is the real impact felt by the borrower? This is where the role of the Sharia Supervisory Board (DPS) and researchers in Islamic economics becomes crucial to conduct an objective evaluation. From all that has been discussed, there are several things worth reflecting on together. First, calling oneself a ‘sharia’ institution should not just be about the name or a promotional strategy. It is a commitment to truly implement fair and accountable muamalah principles. Second, the pattern of administrative fees that increase with the loan nominal needs to be studied more seriously, not immediately condemned, but also not left unsupervised. There is a potential that this pattern could shift the function of the admin fee from what it should be (compensation for real services) to something more resembling profit from a debt transaction. And that, if proven, is problematic under sharia. Third, the task of academics and sharia supervisors is not to judge, but to accompany and provide constructive input. And the public also needs to be continuously educated so they are not easily tempted by the ‘sharia’ label without understanding how the institution truly operates. In the end, the ideal sharia economy is not just about avoiding the word ‘interest’, but about building a system that is truly just and does not exploit anyone, especially those most in need.