Question Summary:
How can I take loan for business from Islamic bank? Question Detail:
How can I take loan for business from Islamic bank?
Answer :
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
An Islamic bank may offer only an interest free loan which is known as qardh-e- hasana. However from a practical point of view, Islamic banks do not generally offer such a loan as an Islamic bank is an investment concern that earns profits/dividends for its partners through mudrabah, musharakah and other contracts.[1]
A mudarabah contract:
The Islamic bank will provide the capital and the client will provide his entrepreneurial skill to earn profit,
The profit will be shared between the two based on an agreed-upon ratio,
Any loss will be absorbed by the Islamic bank
A musharakah contract:
Both the Islamic bank and the client will provide capital,
The client will use his entrepreneurial skills to earn a profit,
The profit will be shared between the two based on an agreed-upon ratio,
If there is a loss, it will be pro-rata the initial investment.
For further details on mudarabah and musharakah, you may refer to the following link:
http://www.slideshare.net/abdullahsoleh5/an-introduction-to-islamic-finance-by
(Read from page 17)
And Allah Ta’āla Knows Best
Maaz Chati
Student Darul Iftaa
Blackburn, England, UK
Checked and Approved by,
Mufti Ebrahim Desai.
[1] “The ideal mode of financing according to Shariah is mudarabah or musharakah”
Introduction to Islamic Finance
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