ISLAMIC FINANCE
By: Mufti Ismail Desai

ISLAMIC FINANCE by Mufti Ismail Desai

 

 

Question

I have give money to builder for investing purpose he will invest this money in his projects when he sell flats he will return an amount as per loss/profit is this permissible according to shariah ?

 

Answer:

We understand that you have given your funds to a builder to invest on your behalf and return the funds based on a profit and loss sharing basis.

 

There are various ways of executing such an investment transaction from a Shariah perspective. Hereunder follows the fundamental concepts and rules thereof:

 

1. Mudarabah – Sweat Partnership

 

Mudarabah is a partnership wherein one partner contributes investment capital to the partnership and the other contributes the labour/management expertise. The investment partner is the Rabbul Mal while the labourer is the Mudarib.

 

In a Mudarabah partnership, a fixed profit ratio/percentage may be fixed. For example, partner A receives 60% of the profits while partner B receives 40% of the profits. However, a fixed amount cannot be fixed nor can a percentage on the capital investment be fixed.

 

All losses will be for the account of the investor.

 

Based on the scenario in reference, the builder can be deputed as the Mudarib while you will be the Rabbul Mal. All responsibilities of management lie with the Mudarib and the investor has no managerial role unless otherwise agreed.

 

2. Wakalah – Agency

 

The builder is appointed by the investor as agent and receives a fixed salary or commission fee. This commission fee or salary is not based on the risk of the project but the work provided by the agent.

 

3. Istisna – Manufacturing Contract

 

Istisna is a contract in which the manufacturer or builder pre-sells a product to the purchaser upfront before manufacturing or building with all the stipulations and specifications of the end product including delivery date. The purchaser pays for the product/building during the contract tenure and then takes ownership and possession once the product is completed and fully paid for. Based on this contract, the builder fixes his mark-up on the building and the purchaser re-sells the building for a profit either via a parallel Istisna contract with another buyer during the tenure of the contract or a sale and purchase agreement after taking ownership of the property.

  

Question

 

Assallamualaikum Sheikh.

I have a question on credit card balance transfer. This does not charge any interest for a stipulated period of time but charges a fee, usually 3%, before thar transfer takes place. Please let me know if it would be permissible to involve in such transactions. Wassalam. 

 

Answer

A credit card balance transfer is the transfer of the balance (the money owed) in a credit card account to an account held at another credit card company.

 

In principle, the usage of a credit card is permissible on condition one is certain of abstaining from interest and late payment fees. The fees charged by the credit card company is only validated in exchange of an equal service provided and not in exchange of the credit provided as that would entail interest and hence prohibited.

 

With regards to your specific query, the 3% charged by the credit card company is in exchange of valid administrative costs and hence permissible. Moreover you should refrain from paying interest on the credit provided by the registering credit provider.

 

Question

As salamu alaikum, i wanted to know the permissibility of working at an Amazon Shipping Warehouse. Its convenient to have this job as i can keep my sharia beard and topi. However, i may have to pick impermissable items for customers. As far as i know alcohol isnt sold by the warehouse but other impermissible products will have to be dealt with. I dont know if a majority of products that i will deal with are permissible or impermissable according to islam as they are determined at random. Please clarify if it ok for me to have this job. Jazak Allah Khair

 

Answer

In principle, there are two aspects which are considered before determining the Shari’ah Compliancy of a job profile:

 

1. The nature of the job profile/description itself.

2. The major source of the funds from which the employees of the company/bank are remunerated.

 

Your job profile as explained in your question is unrelated to the direct production and sale of impermissible items, therefore such a job profile is Shariah Compliant.

 

If the major source of funds through which the employee’s of your company are remunerated is from interest and unlawful money, then it is not permissible for one to work at such a company.

 

However, if the majority of the company's funds are of a non-usurious nature, then employment at such a company is permissible.

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