Lending Money with Riba

20-9-2001 | IslamWeb

Question:

I gave 5000 to a friend of mine to invest in his shop and he promised to give me 1000 for the next six months and after the sixth month he would be returning my deposited 5000 back. Is this deal Haram or Halal? His shop deals with cell phones. Please tell me in detail.

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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 is His slave and Messenger.

The contract you concluded is pure Riba (interest and/or usury) because you gave 5000 to your partner and he is supposed to pay you back 6000, i.e. 1000 interest.

But this transaction could have been lawful if you had given him the money to invest it in a given permissible field and you have decided on a given percentage of the profit for each one of you.

When the period you fixed is over, each one of you takes his portion of the profit if there was any profit and you take back your capital.

On the other hand, you may even lose some of your capital but your partner loses his efforts. This is what is acceptable in the Sharee’ah.

Allah knows best.