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Question Summary: Is investing with a specified profit in return permissible? Question Detail:
I have a question in regards to business dealings. A brother wants to invest '(for example $5000) in a business, and the one receiving the $5000 says I will return your 5000, plus $2000 in a period of 1 year. The lender and borrower both agree on the terms of $5000 + $2000 return. My question is, is that extra $2000 haraam ?
Answer :
In the Name of Allah, the Most Gracious, the Most Merciful. As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. The initial amount $5000 is a loan forwarded to the borrower. Any surplus return on a loan is Riba and completely impermissible. A Sharī῾ah Compliant alternative is through Mudārabah Contract. Please read through the detail guideline on the Mudharabah contract at: http://daruliftaa.net/sharcompliancy/Download-document/Mudarabah-Agreement.html Also read detail guidelines on both Musharakah Partnership and Mudarabah Partnership at :http://daruliftaa.net/sharcompliancy/Download-document/Musharakah-and-Mudarabah-Excerpt-from-Introduction-to-Finance.html And Allah Ta’āla Knows Best Mawlana Faisal bin Abdul Hameed, Student Darul Iftaa Montréal, Canada Checked and Approved by, Mufti Ebrahim Desai.
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