The nature of Riba and rationale of prohibition : seeking for clarification on interest

Fatawa Question

Assalamu Alaikum.. Kindly through some light on the term interest based on Quraan and Hadith. A, B and C are decided to form a partnership firm to do certain business on the following terms : 1. Capital contiribution will be as follows : A- 10 lakhs, B-5 lakhs, and C-1 lakh 2. Interest @ 12 % on capital + profit-drawings will be given to each partner. 3. Net profit after deducting all expenses including interest on capital will be shared between the partners in the ratio 55 : 35 : 15 or as mutually agreed among the partners. A. Whether above mentioned terms is permissible in Shariah ? or not ? B. Whether terms (2) above will come under the definition of Riba, as there is no lending ? C. If both the above question is not permissible, Please advise how to give return on investment to each partner in the above situation. awaiting your kind reply. Jazakkallah.. Kamarudeen

Fatwa

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Publication Date

2006-04-07

Main Subjects

Economics & Business Administration
Islamic Studies

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-790206

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