What is the ruling on borrowing from the bank for the purpose of trading, where I take the profit and bear the loss alone?
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The questioner : O Shaykh, nowadays in bank transactions, for example, I go to the bank and the bank lends me fifty thousand, for instance.
The Shaykh : Lends you?
The questioner : Fifty thousand, for instance. It is a loan, and you sit with them and they invest in it. Then there is an agreement between us that after four months I will return the amount. If I have made a profit, they take that; if I have not made a profit, I cover the loss from my own pocket.
The Shaykh : Do they trust you? They entrust you, meaning?
The Shaykh : The fifty thousand, for instance, I return it after four months. If there is a profit for me, [I return it]; if there is a loss, I pay from my own pocket?
The Shaykh : This is not permissible. This is not permissible. But if you wish, and if the bank is sincere and deals in buying and selling, you give them fifty thousand, or more, or less, and they trade with it. The profit is shared between you two according to what you agreed upon, and the loss is upon you. This is if we know that the bank is sincere and truly buys and sells. Yes.
The Shaykh : Lends you?
The questioner : Fifty thousand, for instance. It is a loan, and you sit with them and they invest in it. Then there is an agreement between us that after four months I will return the amount. If I have made a profit, they take that; if I have not made a profit, I cover the loss from my own pocket.
The Shaykh : Do they trust you? They entrust you, meaning?
The Shaykh : The fifty thousand, for instance, I return it after four months. If there is a profit for me, [I return it]; if there is a loss, I pay from my own pocket?
The Shaykh : This is not permissible. This is not permissible. But if you wish, and if the bank is sincere and deals in buying and selling, you give them fifty thousand, or more, or less, and they trade with it. The profit is shared between you two according to what you agreed upon, and the loss is upon you. This is if we know that the bank is sincere and truly buys and sells. Yes.