Potentially dodgy/riba investment opportunity clarification


I know of someone (third hand) who is thinking to invest a sum of money into a business and from the details I have heard, it sounds like a riba based one with potentially an element of Ponzi involved. To me, there are a number of red flags.

So essentially, the person who is asking for investment is promising a guaranteed 5% return on the investment amount each month. Once the original full amount is paid off, the same guaranteed amount will continue (presumably indefinitely).

Now, I’m not an expert when it comes to Islamic finance but as far as I understand this is riba because the investment is not a partnership where the risk and profit is shared as the return is calculated based on the capital.

The business itself is around importing of goods into the person’s home country.

This kind of investment is not equity based. Sounds more like an interest bearing bond?

In terms of guaranteed income once the initial loan amount has been paid off, I don’t see how that kind of guarantee can be made unless the plan is to get more investment from other people.

Thoughts? Does this sound Islamically acceptable?


Wa alaykum salaam,

Getting a fixed return during the period of the investment does not automatically make it non compliant or problematic. It can be a Murabahah structure or Ijarah structure which are compliant.

The most troubling element in this is the continuous 5% even after maturity. That does not sound compliant.