Islam encourages Muslims to make charitable donations to support and alleviate the conditions of those in need. Qard al-Hasan represents a form of interest-free loan. In Islam, Qard is considered a form of assistance rather than borrowing for profit. This type of loan in Islam is viewed as one of acts of charity and benevolence, rewarded by Allah in both this world and the hereafter, as it promotes solidarity and cooperation among people and helps those in need of financial support. In the early periods of Islam, Qard was widely practiced precisely to seek the reward of Allah.

In modern financial relationships, Islamic financial institutions and individuals with capital provide Qard al-Hasan to support various social initiatives. This can include assistance in organizing weddings, covering educational expenses, supporting entrepreneurial initiatives, or providing working capital for small businesses. When providing Qard al-Hasan, the bank offers a certain sum of money to the client, which the client commits to repay after an agreed-upon period. The client can repay the loan without paying additional interest or fees, although they may, but are not required to, offer the bank some additional amount as a reward for the financing provided. This implies that the lender is not entitled to demand an increase in the loan amount for their benefit, although they may accept voluntary gifts or increments provided by the borrower without any conditions in the contract. Additionally, Qard has a specified term indicated in the contract, and the lender cannot demand repayment of the loan before the end of that term. The lender may also request collateral or a guarantee to ensure the reliability of loan repayment when entering into a Qard al-Hasan agreement.