Question Summary:
Can I get a percentage profit on a loan? Question Detail:
السلام عليكم I have a friend who is in to watch and jewellery trading business . He needs some capital for his business and asked me for funding . He is assuring me a return of 4 percent per month. Is it permissible for me to accept it or should I ask him for a percentage of the profit ? Please clarify
Answer :
In the Name of Allah, the Most Gracious, the Most Merciful.
As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.
It is not permissible for you to offer a capital loan to your friend and receive a repayment of the loan with a percentage profit every month. The excess payment will be Riba (Interest) which is prohibited[1]
A Sharī῾ah Compliant alternative is through the:
Mudārabah Contract
Musharakah Contract
MUDARABAH
One partner provides the capital and the other provides his labour,
Both parties mutually agree to share the profits,
If there is a loss, it will be consumed from the capital.
MUSHARAKAH
The capital contribution is from all the partners,
The profits will be divided according to a mutually agreed percentage,
If there is a loss, it will be pro-rata to the capital contribution.
And Allah Ta’āla Knows Best
Huzaifah Deedat
Student Darul Iftaa
Lusaka, Zambia
Checked and Approved by,
Mufti Ebrahim Desai.
[1] الدر المختار شرح تنوير الأبصار وجامع البحار (ص: 430)
وفي الخلاصة: القرض بالشرط حرام، والشرط لغو بأن يقرض على أن يكتب به إلى بلد كذا ليوفي دينه وفي الاشباه كل قرض جر نفعا حرام،.
الأجوبة الخفيفة فى مذهب الإمام أبى حنيفة النعمانس_ج (ص: 332)
ألشرط الفاسد لا يبطل عقد القرض ولكنه يلغو وكان عليه مثل ما قبض، وكل قرض جر نفعا للمقرض حرام
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