Line of Credit
Posted: 3 Rajab 1422, 21 September 2001
|Q.) I want to know, what is an alternate to Bank Line of Credit to expand business in North America. I have a business and I can help myself and other Muslim brothers if I expand it. To do so, I need line of credit. Let me know if it is ok. If I don’t take LOC, then I may have to shrink my business day by day and close one day. I need detailed answer please. Shukran and Jazak Allah Khairan. [Ashraf Siddiqui]|
A.) Any credit line based on interest is not allowed in Shariah. However, there are many Islamic modes of financing on the basis of which a credit line may be taken. Some of the big international banks like Citibank and HSBC etc have started to act on these modes on a limited basis. If you are able to convince them to give you a credit line on that basis then this is the only solution.
For details about Islamic modes of financing, you can consult my book “An Introduction to Islamic Finance.”