Salaam
I've heard that in the Prophet's (PBUH) time, when signing a loan contract (I think) there would have to be witnesses. Would that still apply today?
But If a loan is not written down and not witnessed, and no pledge is taken, that does not mean that it is a sin. The aayah itself indicates that:
“then if one of you entrusts the other, let the one who is entrusted discharge his trust (faithfully), and let him be afraid of Allaah, his Lord”
[al-Baqarah 2:283 – interpretation of the meaning]
Trust means not guaranteeing the loan by writing it down, having it witnessed or asking for a pledge. But in this case it is essential to fear Allaah. Hence in this case Allaah commanded the one who is in debt to fear Allaah and discharge his trust: “let the one who is entrusted discharge his trust (faithfully), and let him be afraid of Allaah, his Lord”.
