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Fatwa CenterNational bonds based on Mudhaarabah
Question
Assalaumualaikum, in our country we have something called national bonds, i wish to invest in that, but am little worried about interest(i dont want to take interst and start war against allah), they also have monthly draw prizes, how these draw prizes can be halal. i asked the question with nbc.ae and they give me this answer: NBC is a Shari’a compliant product based on the Islamic principles of fund management or Mudaraba. Under such a Mudaraba structure, the fund provider (Shari’a term “Rab Al Mal”) and the Fund Manager (Shari’a term “Mudareb”) join hands whereby the Rab Al Mal provides funds to the Mudareb for investment in identified transactions/projects in a Shari’a-compliant manner and both share the profits emanating from such transactions/projects in a pre-agreed distribution ratio. Upon completion of the Mudaraba agreement, the Mudareb returns the capital to the Rab Al Mal along with the Rab Al Mal’s share of profit earned by the Mudaraba by investing the capital. The profit distributed between the Rab Al Mal and the Mudareb must be the actual profit earned by the Mudaraba from the Shari’a-compliant transactions/projects. The National Bonds Mudaraba has its own Fatwa and Shari’a Supervisory Board to ensure that all aspects of the business and investments are Shari’a compliant. The board is led by Dr. Hussain Hamid Hassan, who also chairs the Shari’a boards of several Islamic financial institutions, both local and foreign. please suggest me, and explain what is mudraba is it anything to do with my investment and do i need to invest in these sort of things. Mudasir Dubai
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
Mudhaarabah is an Islamic term that refers to a transaction where a person gives an amount of money to another person in order to trade with it and the second takes a share in the profit, like one-fourth, or half, or a third and the like. One of the most important conditions of Mudhaarabah is that the person holding the capital money should not guarantee the money unless he is negligent, and thus, if there is a loss in the capital money, the person working (trading) with the capital money is not responsible for it unless he is really negligent.
For more benefit, please refer to Fatwas 91098 and 87688.
Therefore, if you mean by your statement, ''Upon completion of the Mudhaarabah agreement, the Mudhaarib (the one who takes the money) returns the capital to the Rabb Al-Maal (the owner of the capital) along with the Rabb Al-Maal's share of profit earned by the Mudhaarabah…'', that the Mudhaarib guarantees to return the capital money, then this condition renders this transaction a loan with Ribaa (interest and usury) even if it is claimed to be a permissible Mudhaarabah.
However, if this condition is not included in the contract, then it is permissible to partake in such a transaction while abiding by the other conditions of Mudhaarabah.
When the Mudhaarabah is permissible, it is permissible to benefit from the weekly or monthly prize draw.
Finally, it should be noted that there are certificates of investment that some banks issue and are a loan from its owners to the bank, then the bank collects the profits which it wants to give to the owners of these certificates, and then the bank draws lots among all participants and only one person wins all the profits. If this is the reality of what is called national bonds, then this is a type of gambling in addition to it being a loan with Ribaa.
Allaah Knows best.
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