Halal Investment – Assalamualaikum! There are a lot of misconceptions about Halal Investments In India. Because of this large number of frauds are happening. And many Muslims are losing their hard-earned money worth billions (of Muslim wealth). Further, even the so-called finance experts in India are mostly Hindus who are not aware of the actual rulings of Islam.
Hence, I have started this thread to educate people about the real concept of Halal Investments, Halal Business & Islamic Finance. I am an MBA Graduate, having experience as a Business Development charge for various startup projects. I have helped companies to grow from scratch and establish businesses. I have done a lot of research in Islamic Finance and I strongly believe, the schemes which are being offered by Halal Companies in India are not at all halal. And thus are ending up winding up businesses and leaving a lot of financial damage to the community.
Read our detailed research article on Islamic Board: Halal Investments In India
Biggest mistake Indian Muslims are doing in terms of Halal Investments
One of the biggest mistake most of the Indian Muslim Investors doing are, to expect return of capital investment. We can say, this is because of the influence of local practice of people giving money on interest.
Interest Based Transaction: In India many Hindus give money on Interest say 5% per month. The person who took money on interest has to pay 5% every month and on the completion of said duration, he has to return the full amount. This kind of transaction is haram.
Halal Investment Transaction: In halal transaction, the investor gives money for business. He takes back what ever the profit/loss is incurred on business. Under normal conditions he can expect full refund. But if the company is not performing well, he has to compromise with what ever amount is refunded. He can’t pressurize the company for full refund.
However, in India many Muslims are expecting companies to pay main investment even after taking complete profits. For example, a person invested an amount of Rs. 1,00,000/-. He took a profit of 10% per month for a period of 24 months. Hence, the total amount he earned is Rs. 2,40,000/- which is higher than the invested amount. Even after taking so much profit, he is still expecting the main investment of Rs. 1,00,000/- to be refunded. For some reason, if the company is not able to give the main amount. Even after taking so much profits, the investor accuses the company of fraud.
For example, a person has invested an amount of Rs. 1,00,000/- and he earned profit of Rs. 10,000/- for a period of 6 months. Then after 6 months, the company says that they are in loss and cannot refund the total amount. Then the investor has to accept what ever amount the company is offering. Even if the company says, they cannot refund the balance amount, the investor has to accept. This is called as halal investment. It may sound as burden on our heart. But Allah demands us to follow this method for smooth flow of living.
In reality all conventional businesses whether run by non-Muslims or Muslim run in the above mentioned halal way. But because of the interest mindset of Muslim investors, even Muslim companies are offering security for the investment, assuring guarantee of investments and setting high expectations of Muslim investors. And when the expectations are not meant, the investors are feeling cheated.
This has not to be confused with companies who are doing fraud in the name of Halal Investments. Some companies are running fraudulent ponzi schemes and disbursing huge profits initially and then winding up their business. We have discussed about ponzi schemes in above article on Islamic Board.
