A man lent money to another man on the condition that the lender would take half of the borrower's profit. Is this permissible?
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The questioner : In the name of Allah, the Most Gracious, the Most Merciful.
Your Eminence, a man borrowed money from another on the condition that he would take half of the profit that the debtor would receive. Is this permissible?
The Shaykh : What?
The questioner : that the debtor would receive. Is this permissible? May Allah bless you.
The Shaykh : That is, a man borrowed money from a person to trade with it, on the condition that the lender would have half of the profit. This is haram (forbidden) and not permissible. Because the established rule among the scholars is: every loan that brings a benefit is riba (usury or interest). But better than that is to say: Take this money and trade with it, and you will have half of its profit. Did you understand?
Now, if someone asks: What is the difference between this and that? We now understand that if he lent him ten thousand riyals and said: These ten thousand riyals are a loan, on the condition that I have half of the profit. The answer: Is it haram (forbidden) or halal (lawful)?
The student: Forbidden.
The Shaykh : Forbidden.
The student: Yes.
The Shaykh : Forbidden.
The student: Yes.
The Shaykh : Because it is a loan that brought a benefit.
Now, if he said: Take ten thousand and trade with it, and you will have half of the profit? Is it halal (lawful)? What is the difference?
The difference is that in the case of a loan, if the money is lost, who bears the loss? The debtor, because he borrowed ten thousand and ten thousand became established in his liability. But in the case of a mudarabah (profit-sharing partnership), if he said: Take ten thousand and trade with it, and you will have half of the profit, if the money is lost or destroyed, who bears it?
The student: ...
The Shaykh : No, no, my brothers, it is on the partner, on the partner who paid the money. Or did you not understand?
Now, there is no detail other than what I said: A man lent money, ten thousand riyals, and said: Trade with it, and I will have half of the profit. The man traded with the money and lost it or it was destroyed. Who guarantees the ten thousand? The same borrower. The borrower pays ten thousand to the one who lent him.
The second issue: He gave him ten thousand and said: Take these ten thousand as a mudarabah (profit-sharing partnership), trade with it, and you will have half of the profit. Then Allah decreed that this money burned. Who does it fall upon? It falls upon the owner of the money, upon the owner of the money. And this is a clear difference. Did you understand now? Good.
Your Eminence, a man borrowed money from another on the condition that he would take half of the profit that the debtor would receive. Is this permissible?
The Shaykh : What?
The questioner : that the debtor would receive. Is this permissible? May Allah bless you.
The Shaykh : That is, a man borrowed money from a person to trade with it, on the condition that the lender would have half of the profit. This is haram (forbidden) and not permissible. Because the established rule among the scholars is: every loan that brings a benefit is riba (usury or interest). But better than that is to say: Take this money and trade with it, and you will have half of its profit. Did you understand?
Now, if someone asks: What is the difference between this and that? We now understand that if he lent him ten thousand riyals and said: These ten thousand riyals are a loan, on the condition that I have half of the profit. The answer: Is it haram (forbidden) or halal (lawful)?
The student: Forbidden.
The Shaykh : Forbidden.
The student: Yes.
The Shaykh : Forbidden.
The student: Yes.
The Shaykh : Because it is a loan that brought a benefit.
Now, if he said: Take ten thousand and trade with it, and you will have half of the profit? Is it halal (lawful)? What is the difference?
The difference is that in the case of a loan, if the money is lost, who bears the loss? The debtor, because he borrowed ten thousand and ten thousand became established in his liability. But in the case of a mudarabah (profit-sharing partnership), if he said: Take ten thousand and trade with it, and you will have half of the profit, if the money is lost or destroyed, who bears it?
The student: ...
The Shaykh : No, no, my brothers, it is on the partner, on the partner who paid the money. Or did you not understand?
Now, there is no detail other than what I said: A man lent money, ten thousand riyals, and said: Trade with it, and I will have half of the profit. The man traded with the money and lost it or it was destroyed. Who guarantees the ten thousand? The same borrower. The borrower pays ten thousand to the one who lent him.
The second issue: He gave him ten thousand and said: Take these ten thousand as a mudarabah (profit-sharing partnership), trade with it, and you will have half of the profit. Then Allah decreed that this money burned. Who does it fall upon? It falls upon the owner of the money, upon the owner of the money. And this is a clear difference. Did you understand now? Good.