From the info that's given so far, there are impt background aspects that were not mentioned before a conclusion can be made:
- does your hubby agree with his parents' perspective of treating in-laws as outsiders? What is the current warmth/coldness of relations between him and your family?
- how are your family expenses handled between the 2 of you? Your levels of income and savings? Is his contribution to the expenses fair to his income and savings?
- does he have that spare cash immediately on hand or does he have to incur a penalty to retrieve the cash from an investment vehicle?
You should not answer the above questions in detail online as most of them are too personal but you can give an overview if you would like more opinions. My opinion is a married couple can keep separate financial accounts but should still treat both accounts as one just as a marriage unites 2 persons. If a spouse needs the money for a good cause and I have it without having to incur significant expenses or jeopardise our family's future, I will undoubtedly hand it over interest free. However, if it is for a cause/person that I don't agree, I won't loan even if interest was offered as this is a matter of personal values. This situation is an opportunity to evaluate your marriage direction in the short and long term.