Profits offered by a leading Islamic
publishing company
Q509 :A leading Islamic publishing company in a
Muslim country accepts deposits from member of the public and pays the
depositor a monthly profit at a fixed rate. It adds a condition that if
the depositor withdraws his money, he has to give one month's notice
when the company will return the actual amount originally deposited.
There is no time limit for keeping the investment. Is this practice
permissible.
A509 : There is nothing wrong with placing certain
conditions on an investment, such as requiring one month's notice for
withdrawal of deposited money. The company wants to be able to adjust
the withdrawal of deposits without affecting its transactions.
Similarly, there is nothing wrong with paying profits at regular
intervals. But what worries me is that the profits paid by the company
are given at a fixed rate. What this means is that the returns on the
investment have no proper relation to the actual profits of the
company. Nor is the depositor taking any risk with his investment. In
other words, if the company makes losses, rather than profits, it will
continue to pay the fixed rate of profits to the depositors who bear no
proportion of the losses. For these two reasons, i.e. the absence of
risk and the advance determination of the rate of returns, the
partnership between the depositor and the company is not complete.
Therefore, the transaction cannot be approved.
Our Dialogue ( Source : Arab News - Jeddah )