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Fatwa CenterIncome-Share-Agreement (ISA)
Question
Assalaamu alaykum. This finance-related question is controversial. I reside in the US and have asked a few knowledgeable imams. Some of them expressed that it is haram, and others did not. I would like to know if income-share-agreement, also known as ISA, is an interest-free financing halal alternative. We all know that loans with interest are haram since it has 'benefits'. Please clarify why ISA is haram or halal. Thank you. Assalaamu alaykum.
Answer
All perfect praise be to Allah, the Lord of the worlds. I testify that there is none worthy of worship except Allah and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
We are unable to conceptualize the financial transaction in reference, and forming a judgment on any given matter is based on conceptualizing it. We advise you to refer the question to the fatwa committee at the Islamic Fiqh Academy in America.
Allah knows best.
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