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Borrowing a loan on the condition to pay back the capital along with a profit.

Answered as per Hanafi Fiqh by Askimam.org

I’d like to know if someone borrows me 10000.00 to start of my business and wants to be paid the same amount back when I’m ready to do so but for every item produced in my company he wants R1.00 is that permissible?


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

As-salāmu ‘alaykumwa-rahmatullāhiwa-barakātuh.

In principle it is not permissible to derive any benefit from a loan.Rasulullah (Sallallahu Alaihi wasallam) said every loan that draws a benefit is interest. [1]

Hence it will be incorrect to borrow R10000 with a condition to receive R1 for every item produced.

If the person wish to benefit from the R10000 he may enter into a Mudaarabah contract with you.

In brief Mudaarabah is the person gives you R10000 as capital to do business and both of you share the profit according to mutual agreement. For example, 50%. Each if there is a profit of for example R1000, both will give R500. If there is a loss it will be taken out from the R10000 and you will get no profit.[2]

Please download the standard Mudaarabah contract prepared by the DarulIftaa at : http://daruliftaa.net/sharcompliancy/Download-document/Mudarabah-Agreement.html

And Allah Ta’āla Knows Best

Mufti Mouhammad Yassine Ibn Ibrahim Ibn Ismael Panchbhaya,


Checked and Approved by,
MuftiEbrahim Desai.

[1] رُوِيَ أَنَّ كُلّ قَرْضٍ جَرَّمَنْفَعَةً فَهُوَ رِبًا (تبيين الحقائق شرح كنزالدقائق وحاشيةالشلبي(6/ 29))

[2] المضاربة: عقدٌ على الشركة بمالٍ من أحد الشريكين وعمل من الآخر، ولا تصح المضاربة إلا بالمال الذي بينا أن الشركة تصح به، ومن شرطها أن يكون الربح بينهما مشاعاً (اللباب في شرح الكتاب ، الكتاب المضاربة)


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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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