As salam alaikum
I have been making SIP payments to a few 100% equity based mutual fund in India since 2019.
Recently I learned that its prohibited to invest in mutual funds that deal with banking and financial institutions, as they rely on riba. Since then I have stopped my monthly payments in those funds. These funds have holdings anywhere between 20-28% in banking and financial institutions. With market being extremely good right now, the investment value has appreciated significantly.
Also note, I have been paying zakat of 2.5% on the entire portfolio amount.
I would like to know the ruling if it is permissible for me to utilize this money? If not, what is the ruling on what is to be done with the money ?
Jazakallahu khairan
Answer
Wa’alaykum as Salam wa rahmatullahi wa barakatuhu,
In order to comment on an entire investment scheme, the contracts, Terms and Conditions and fine print has to be studied. Hence, we cannot issue a verdict on this particular fund.
If the financial Institutions have holdings under 30%, there is scope for this fund to be permissible. However, the remaining clauses will also have to be inspected.
And Allaah Ta’aala knows best
Wassalaam,
Ismail Moosa (Mufti)