Fixed Payment To Investors Against Amount Taken For Investment In Stock Exchange
Sir just wanted to clear that what is bothering me is the condition that I have to pay them fixed 5% per month even if I loss … Is it not riba ?
For something to be categorized as interest, it needs to be a loan arrangement and lender must demand profit on loan. Merely presence of a fixed return doesn’t necessarily make it interest. Financing arrangements/Investments may also include fixed amount of return ( which can be lowest estimated profit or average estimated profit ) . Therefore, the distinguishing factor for Interest here is the presence/absence of a loan arrangement. As far as financing arrangements are concerned, we see their terms and conditions separately so that nothing unethical is being part of the transaction in general. On a side note just for clarification, it is consumption of interest which is prohibited in Islam, not the payment of Interest (For further details regarding Payment of Interest : Discussion 72050 ) __ Ghamidi Sahab considers Principal-Secured Financing and Payment of Fixed Estimated Profit at lower end or a Fixed percentage of estimated profit at lower end as ethical financing transactions . When there is complete loss for the whole year and no average profit or estimated profit, then of course there won’t be any return being paid to the investors, however their principal amount would be secure and should be returned to the investors upon their demand. Please refer to the video below from 1:15:47 to 1:20:12 https://youtu.be/ZAch89JqHqQ?t=4547