The question is usually asked the wrong way round. It is not whether instalments are halal, but whether this instalment contract is — and that turns on two or three specific clauses.
Why a higher price for deferred payment is permitted
Start with the distinction that does the work: money lent versus goods sold.
If someone lends you PKR 100,000 and asks for PKR 121,000 back, the extra is a charge on money for the passage of time. That is riba, and no structure disguises it.
If someone buys a phone and sells it to you for PKR 121,000 payable over ten months, when its cash price is PKR 100,000, the extra is profit on a sale. The seller acquired the item, took ownership and bore the risk of it. Scholars permit this: the deferred price may exceed the cash price.
This is the basis of bai muajjal (deferred-payment sale) and murabaha (cost-plus sale, where the seller discloses what they paid and what they are adding). AAOIFI Shariah Standard No. 8 governs murabaha; Mufti Taqi Usmani’s An Introduction to Islamic Finance is the standard reference for the reasoning.
The condition everything hangs on
The permission is conditional, and the condition is simple enough to check yourself: once the sale concludes, the debt is fixed.
The price must be known and agreed at the moment of contract. It cannot be indexed, revised, or increased later. If the amount you owe can grow after you have signed, the arrangement has stopped being a sale of goods and become a charge on time — which is the thing being prohibited, regardless of what the contract calls it.
That single test disposes of most of the ambiguity in this market.
Why late fees are the contested part
Here is where conventional pay-later products and Islamic finance genuinely part company.
If a debt is fixed at contract, then a charge that appears because you paid late is an addition to a fixed debt.
What the standard actually says
AAOIFI Standard No. 3, “Default in Payment by a Debtor”, addresses this directly. It does not permit stipulating financial compensation as a penalty for delay in settling a debt — but it does permit obliging a defaulting debtor to donate an amount to charitable causes, under the supervision of the institution’s Shariah board.
The practical distinction scholars draw is between ta’widh — compensation for actual, documented loss, which may be retained — and gharamah, punitive excess, which may not be institutional income at all.
| Approach | Where the late fee goes | Standing |
|---|---|---|
| Conventional late fee | Company revenue | The standard objection |
| Documented actual loss (ta’widh) | Company, capped at real cost | Permitted |
| Punitive charge (gharamah) | Charity, under Shariah-board supervision | The compliant route |
Pakistan’s Islamic banks operate this way in public. Meezan Bank’s own Car Ijarah page states that a customer who fails to pay rent on the due date “will pay certain amount to a charity, which will be administered through the Islamic Bank.” The State Bank’s IBD Circular No. 02 of 2008 governs Shariah compliance instructions for Islamic banking institutions.
Four tests you can apply to any plan
Judge the contract, not the branding. These four questions cover most of what matters:
- Is the total price fixed and written down before I sign? It must be knowable at contract.
- Can the amount I owe ever increase? It must not, for any reason including delay.
- If I pay late, where does the charge go — the company, or charity under a Shariah board?
- Is there a named Shariah authority, and what exactly has it reviewed? A board that has certified one product has not certified all of them.
That fourth test cuts both ways, so applied to Oraan honestly: Oraan Committees have been reviewed for Shariah compliance by Safwah Shariah Advisory with Mufti Usama Ehsan, and the certificate is for Committees.
Oraan Instalments charges a fixed service fee, set when your plan is approved, which does not increase and is not interest. It has not been separately certified, though — and this post will say so rather than imply otherwise.
What about committees?
A committee is a different structure and has its own ruling.
Darul Ifta at Darul Uloom Deoband in India, in fatwa 1099/691/L=1432, holds the standard committee permissible: equal fixed contributions, payout order set by lot, everyone receiving exactly what they put in. The arithmetic is flat — ten members paying PKR 10,000 for ten months each pay in and take out PKR 100,000.
The same fatwa rules the bidding variant unlawful: where members bid down the payout they will accept, taking PKR 80,000 from a PKR 100,000 pool. The reasoning given is that “when the exchange of rupees is with rupees then the difference is haram” — an unequal exchange of like for like, the category scholars call riba al-fadl.
What nobody can tell you yet
Two honest gaps, because a post like this is worth less if it pretends they are not there.
There is no AAOIFI standard on pay-later products, and no Pakistani mufti ruling on these apps specifically. The closest formal ruling is Malaysia’s Shariah Advisory Council, which held in January 2024 that such products are permissible for Islamic licensees where the underlying contracts comply and the Shariah committee approves in writing.
So there is no list to consult. There is a contract in front of you, and four questions to ask about it.
This post explains published scholarly positions and is not a fatwa. For a ruling on your own circumstances, consult a qualified mufti. Sources checked 10 September 2026.
Sources
- Mufti Taqi Usmani, An Introduction to Islamic Finance — the standard reasoning on deferred-price sale and murabaha
- AAOIFI Shariah Standards — No. 8 on murabaha, No. 3 on default in payment by a debtor
- Darul Ifta, Darul Uloom Deoband — fatwa 1099/691/L=1432 — the draw-based committee permitted, the bidding variant unlawful
- Meezan Bank Car Ijarah — how a Pakistani Islamic bank publicly handles late payment
- SBP IBD Circular No. 02 of 2008 — Shariah compliance instructions for Islamic banking institutions
- Bank Negara Malaysia, SAC ruling on Buy Now Pay Later — published 24 January 2024
- Oraan’s Shariah compliance — the advisory board, and which product the certificate covers
