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Doing business with a partner who took loan on intrest?

Answered as per Hanafi Fiqh by Askimam.org

I & want to start business in partner ship with a Muslim brother, both us don’t have the money needed to do so, hence we will invest together(me 40% or less, HE 60%) I will buy all the equipment required for the business on INSTALLMENT basis while HE will take a loan from the bank(on INTEREST BASIS), I told him that interest is haram, he said that is none of your concern How & Where HE gets the money from. My question is should I go ahead knowing his money is interest based, since mine is HALAL? and we will split the profit 50%(I get 10% more coz I will be running the business) Situation 2: If it is haram to do business with such a brother, then I will start a business any way but I will put in my part of investment & ask him to take me as an employee with fixed amount of salary(independed of how much profit he makes), Then later ask him to pay all the installments of the equipment back to me. Situation 3: I start the business any way, take a fixed amount of salary plus commission (such that we actually do split the profit 50%) and don’t take the Installment’s of equipment from him? situation 4: now i was in a process of deciding what to do(i already told him that intrest is haram) but now he already took the loan & pay the rent for the shop & will suffer a loss if i dont start the business with him now situation 5: when you are going to reply to this question mostprobably, the business process would me almost complete, assuming i started it what shell i do?

Answer

It is not recommended that you venture into a partnership with such a person. It is advisable that you encourage the brother that he terminate his interest bearing loan by borrowing money on a non-interest basis and paying off the interest bearing loan.

If he cannot be convinced, then it would be necessary for you that you terminate your partnership as it is feared that you may be involved in this wealth eating Haram interest.

and Allah Ta’ala Knows Best

Mufti Ebrahim Desai

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This answer was collected from Askimam.org, which is operated under the supervision of Mufti Ebrahim Desai from South Africa.

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