What is the ruling on the transactions of investment funds in banks?
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Question:
What is the ruling on dealing in one of the local banks in investment funds, where there is a contract between the bank and the depositor regarding profit and loss?
Answer:
This is permissible if it is safe, provided it must be through the path of profit and loss, meaning: through the path of mudarabah (profit-sharing partnership). It is a shared portion; he gives him one hundred thousand, or more, or less, and says: work in it through mudarabah, buy cars, buy currencies and sell them, and says: you get half, or you get a quarter, or you get a fifth. There is no harm in that.
As for a specific interest: you get 5%, 10%, this is riba (usury or interest), it is not permissible.
But if it is a quarter of the proceeds: a quarter of the profit, a tenth of the profit, meaning 10% of the profit, 20, 50, half, there is no harm. This is called mudarabah (profit-sharing partnership), and it is permissible according to all scholars. But can they be trusted? This is a matter of concern. Can they be trusted in this operation, or do they sell with riba (usury or interest)? Some of them cannot be trusted, and I doubt that they are trusted in this matter; because they have become accustomed to riba (usury or interest). But if it is with trustworthy people, then that is good.
What is the ruling on dealing in one of the local banks in investment funds, where there is a contract between the bank and the depositor regarding profit and loss?
Answer:
This is permissible if it is safe, provided it must be through the path of profit and loss, meaning: through the path of mudarabah (profit-sharing partnership). It is a shared portion; he gives him one hundred thousand, or more, or less, and says: work in it through mudarabah, buy cars, buy currencies and sell them, and says: you get half, or you get a quarter, or you get a fifth. There is no harm in that.
As for a specific interest: you get 5%, 10%, this is riba (usury or interest), it is not permissible.
But if it is a quarter of the proceeds: a quarter of the profit, a tenth of the profit, meaning 10% of the profit, 20, 50, half, there is no harm. This is called mudarabah (profit-sharing partnership), and it is permissible according to all scholars. But can they be trusted? This is a matter of concern. Can they be trusted in this operation, or do they sell with riba (usury or interest)? Some of them cannot be trusted, and I doubt that they are trusted in this matter; because they have become accustomed to riba (usury or interest). But if it is with trustworthy people, then that is good.
Source
binbaz.org.sa
The Arabic text is copied verbatim from the original source, without any edits.