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How can I take loan for business from Islamic bank?

Answered according to Hanafi Fiqh by Askimam.org

How can I take loan for business from Islamic bank?

Answer

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

An Islamic bank may offer only an interest free loan which is known as qardh-e- hasana. However from a practical point of view, Islamic banks do not generally offer such a loan as an Islamic bank is an investment concern that earns profits/dividends for its partners through mudrabah, musharakah and other contracts.[1]

A mudarabah contract:

  • The Islamic bank will provide the capital and the client will provide his entrepreneurial skill to earn profit,
  • The profit will be shared between the two based on an agreed-upon ratio,
  • Any loss will be absorbed by the Islamic bank

A musharakah contract:

  • Both the Islamic bank and the client will provide capital,
  • The client will use his entrepreneurial skills to earn a profit,
  • The profit will be shared between the two based on an agreed-upon ratio,
  • If there is a loss, it will be pro-rata the initial investment.

For further details on mudarabah and musharakah, you may refer to the following link:

http://www.slideshare.net/abdullahsoleh5/an-introduction-to-islamic-finance-by

(Read from page 17)

And Allah Ta’āla Knows Best

Maaz Chati

Student Darul Iftaa
Blackburn, England, UK 

Checked and Approved by,
Mufti Ebrahim Desai.


[1] “The ideal mode of financing according to Shariah is mudarabah or musharakah”

Introduction to Islamic Finance

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