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Riba In Business Loan
Assalamualaikum,
One of my uncle took some money from his friend for business. In return my uncle promised that he will keep giving his friend an amount every month as profit. Uncle gave the money for only two months and then his business broke down. He stopped giving the monthly amount and didn’t return the money for several years. Now they sat together, discussed the issues and fixed an amount that my uncle should return to his friend. The amount is some more than the amount he took and he agreed to pay the money.
Is this extra amount Riba?
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2 Replies
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Riba In Business Loan
updated 3 years ago
2 Members
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Replies
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In principle, riba is only a concern in loan transactions, not business partnerships.
Without knowing the details of the agreement, it’s hard to give you a conclusive answer. However, if your uncle was sharing business profits with his friend then more than likely this was a business partnership. In that case if your uncle’s business was shut down then his friend can only demand the amount that he had originally invested. If your uncle has agreed to return an additional amount to cover for the cost of inflation then there’s no harm in it.
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Jajhakallahu khoir.
I understand that it is difficult to reply with so little information.
As far as I came to know of the contract, it was an oral contract. My uncle told that he will keep giving the amount without mentioning whether it is a profit or just a benefit against the money.
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