Repaying Loans After Currency Devaluation

Short answer: (1) Loans are repaid like-for-like (mithlan bi-mithl) — you lent one lakh, one lakh is your due; stipulating or demanding inflation compensation is increase upon a loan — riba. This is the ruling of the majority and the Fiqh Academy. However, the borrower voluntarily paying more at settlement, without prior condition, is the sunnah of excellent repayment — lawful. (2) Zakat: on the receivable's amount (the one lakh) — yearly if a strong debt, upon recovery if weak. Details: The halal way to guard against inflation lies at contract time: for long terms, denominate the loan in gold or a stable measure (lend a bhori of gold → a bhori of gold returns) — fixed at the outset, never switched midway. For catastrophic collapse (the currency effectively dead) some jurists discussed different reckonings — consult a qualified scholar in such an exception; ordinary inflation does not reach that level. Evidence: Quran 2:279 ('neither wrong nor be wronged'); Sahih al-Bukhari 2393 (the best are the best in repayment — voluntary excess from the payer's side); Sahih Muslim 1587 (equivalence in exchanging monetary metals); the Islamic Fiqh Academy (Jeddah) and the Permanent Committee that loans repay at par and indexation is riba. For complex individual cases, consult a qualified scholar.