Q: Is interest permissible if below the inflation rate?
الجواب حامدا ومصليا ومسلما ومنه الصدق والصواب
A: The permissibility of interest at or below the rate of inflation is not supported by Al-Qalam and the majority of scholars. Please see the following link:
http://www.1stethical.com/wp-content/uploads/2010/07/StudentLoans.pdf
Rather, any loan that attracts a conditional increment is not permitted. This is irrespective of the rate of the increment.