Most schools, when distributing the profits of the cooperative canteen at the end of the year, pay a profit share to the students, where the share usually receives
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The questioner : Noble Shaykh, most schools, when distributing the profits of the cooperative canteen at the end of the year, pay a profit share to the students, where the share usually receives one hundred percent, meaning that for every ten riyals paid by the students, they receive twenty riyals. This may be pre-determined in the mind of the school administration and is commonly practiced.
Is this form considered one of the forms of forbidden riba (usury or interest)?
The Shaykh : As I understand it, these canteens in schools earn a real profit, not a fictitious one. It is known that if a person gives his money to someone who earns a profit with it, and the ten becomes twenty or the ten becomes one hundred, this profit is permissible and is not riba (usury or interest) in any way. For example, if this canteen earns a large profit, it is permissible to give these investors twenty for ten or one hundred for ten, according to the profit. Yes.
Is this form considered one of the forms of forbidden riba (usury or interest)?
The Shaykh : As I understand it, these canteens in schools earn a real profit, not a fictitious one. It is known that if a person gives his money to someone who earns a profit with it, and the ten becomes twenty or the ten becomes one hundred, this profit is permissible and is not riba (usury or interest) in any way. For example, if this canteen earns a large profit, it is permissible to give these investors twenty for ten or one hundred for ten, according to the profit. Yes.