✦ Fixed Profit in Business Partnership: A Shar‘i Review ✦
A person offered me the following: “You invest 100,000 rupees in my business, and I will give you 30,000 rupees every month, whether the business profits or incurs a loss.”
Is this agreement permissible in Islamic law?
Shaykh Abdul Wakeel Nasir (Hafizahullah)
If a fixed monthly return is promised on an investment—regardless of profit or loss—then:
✔ This falls under the category of riba (interest)
✔ It is not permissible in Islamic finance
"كل قرض جر منفعة فهو وجه من وجوه الربا"
“Every loan that brings about a benefit (to the lender) is a form of interest (riba).”
Islamic business partnerships require that:
✔ Profit must be linked to actual business performance
✔ Profit should be distributed as a percentage of the actual profit, not as a fixed amount
◈ It can be agreed that:
70% of the profit will go to the working partner,
30% of the profit will go to the investor.
✔ This means if profit increases or decreases, the investor's return will adjust accordingly.
✔ In case of a loss, both parties share the loss according to their investment ratio—as per Shar‘i rules of partnership (Musharakah or Mudarabah).
A fixed monthly return regardless of business outcome is unlawful and interest-based.
Profit sharing must be based on a pre-agreed percentage of actual profit.
In case of loss, both parties bear it in accordance with Islamic partnership principles.
❖ Question:
A person offered me the following: “You invest 100,000 rupees in my business, and I will give you 30,000 rupees every month, whether the business profits or incurs a loss.”
Is this agreement permissible in Islamic law?
❖ Answer by:
Shaykh Abdul Wakeel Nasir (Hafizahullah)
❖ Ruling on Fixed Monthly Profit
If a fixed monthly return is promised on an investment—regardless of profit or loss—then:
✔ This falls under the category of riba (interest)
✔ It is not permissible in Islamic finance
"كل قرض جر منفعة فهو وجه من وجوه الربا"
“Every loan that brings about a benefit (to the lender) is a form of interest (riba).”
❖ The Correct Islamic Method for Profit Sharing
Islamic business partnerships require that:
✔ Profit must be linked to actual business performance
✔ Profit should be distributed as a percentage of the actual profit, not as a fixed amount
✔ Example:
◈ It can be agreed that:
70% of the profit will go to the working partner,
30% of the profit will go to the investor.
✔ This means if profit increases or decreases, the investor's return will adjust accordingly.
✔ In case of a loss, both parties share the loss according to their investment ratio—as per Shar‘i rules of partnership (Musharakah or Mudarabah).
❖ Summary
A fixed monthly return regardless of business outcome is unlawful and interest-based. Profit sharing must be based on a pre-agreed percentage of actual profit. In case of loss, both parties bear it in accordance with Islamic partnership principles.