Investment In Profit Of A Business Not Loss

[Dr. Irfan Shahzad]

Yes. There is nothing ethically wrong in it. All trades and business transactions are lawful unless there is something ethically questionable in it.

[Ahmad Zia Jamili]

Thanks Dr Irfan ab,

Then what about investing money in bank is it not prohibited too? is there anything questionable ethically if it is prohibited?

[Umer]

Since bank’s primary source of Income is based on Riba, therefore, it is considered prohibited to take any share from that income.

Please see the following response of Ghamidi Sahab:

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[Umer]

Ghamidi Sahab is proponent of Principal-Secured Financing as a mode of alternative financing to current lending operations of the Banking Sector. This entails that an investor doesn’t necessarily have to share losses of a buisness from his principal investment amount, which should be kept secure for the financer.

e.g. If the investor is not actively involved in management and day to day operations of the business then he should go for principal-secured financing arrangement, where his principal investment will be secure and returned to him in case of permanent loss, with exceptions to extraordinary circumstances. As for the profits, investor can either agree to split them as a percentage of actual profits or losses (won’t be taking any profit in case of a loss); or investor can agree on a percentage share for estimated profits by choosing a low percentage so that it covers for both profits and losses throughout the years.

To understand further, please refer to the responses of Ghamidi Sahab shared in the following links.

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[Umer]

For further comments of Ghamidi Sahab, please also refer to the video below from 19:35 to 24:16

https://youtu.be/tOI_yWiJYAA?t=1175