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