Understanding Halal Investments In India

Halal Investments are the best form of investments with Zero Tension and Hassle Free growth of your wealth. However, it has to be followed strictly as per instructions of Sharia. Unfortunately many Muslim Businesses and Investors expect/do haram activities in the name of Halal Business. Which eventually leads to crash of business. In this article, we will thoroughly understand what is Real Halal Investments and how companies and individuals should look at halal investments to make it successful.

1. Why You Should Do Halal Investments ?

1.1 Halal Investments are for people who fear Allah in its true essence, respect other Muslims as their own brothers and sisters. And have complete faith in the sayings of Allah and Prophet Mohammed (pbuh). If your goal is only to earn money, then Halal Investments are not for you.

1.2 Halal Investments are not done to just earn more money. The investor should do with the intention to encourage Muslim businesses and build long term projects. Businesses make community strong and give opportunity to be in power and make wise decisions for the welfare of the community. Earning profit is an obvious output of a successful business.

1.3 Halal Investments have the power to safeguard your investments. While conventional businesses may collapse due to recessions or other influences, Halal Investments will stabilize the business and sustain in tough times. Only when you follow the rules of Halal Investments.

2. General Rules of Halal Investments

2.1 Halal Investments should be done for long term, like minimum of 6 months to 1 year and to maximum of 10+ years. If you are planning for a short span, then in general investments are not for you. Because, Halal Investments require your endurance and will to establish and grow your businesses.

2.2 Halal Investments are not individual centric. You should never think of yourselves in decision making of investments. Once you invest with the company, you become the family of investors and any impatience action taken by you, can damage the efforts of the organization to manage and grow a halal company which is not at all an easy task.

2.3 Profit and loss are an integral part of Halal Investment. If you are earning profit on your investment. Then you should also bear with losses. If you are not ready to bear loss or delay in payments, then your investment will not be halal. Most investors fail here. They take profits as long as they can take and when ever there is delay in profits, they will blame the company to be doing fraud. As a halal investor you should understand, taking profits, getting low or no profit in any month and bearing with delay in payments only makes your investment halal. If you are not ready to accept all these, then your investment and profits won’t be halal.

2.4 While doing Halal Business is easy on the company and investors. Handling difficult situations is tough. This is where the Halal Investments Test comes into picture. There can be delays in payments which is completely normal in any business. The only reason Halal Businesses succeed is when they pass this test. And the test is to keep patience and do not pressurize the company to refund amounts in case of any delay. Because the first rule of halal investment is to accept both profits and losses in business. And if you not ready to accept any loss or delay, then your investment is no longer halal and it amounts to collection of forcible interest.

2.5 Profits/losses are sharing based on percentage and not fix amount. For example, the share of all investors can be 80% and the share of company can be 20%. If the company earns a profit of Rs. 1,00,000/-, then 80,000/- is distributed among all the investors and Rs. 20,000/- is taken by the company. In the next month, the profit may increase or decrease based on earnings. But you will get 80% share only according to agreement.  However, you cannot demand a fixed amount like you may invest an amount of Rs. 1,00,000/- and demand a profit of 5% per month irrespective of profits. Then such demand is not called as profit but interest which is purely haram in Islam.

2.6 As a halal investor, the most important thing is handling less or delay of profits. In our experience we have noticed, that 95% of the investors happily take the profits, but when ever the profits are low or delay in payments, investors start accusations on the company. This is a wrong practice and makes your investments and profits haram. It is a common practice in business that profits can vary, in one month you can earn more and in the second month, you may earn less or even no profit. As a halal investor, you should be able to handle this situation. If the company cannot make any profits, then how can they pay the investors ? If any investor is demanding profit even if it didn’t earn any, then such demand will make your investment haram as there is no concept in Islam (or in conventional business) to pay even if the business doesn’t earn.

3. Halal Investment Agreement

3.1 You can invest any amount starting from Rs. 10,000/- and for the fixed duration of 3 month, 6 months, 12 months, 24 months, 36 months, 48 months and 60 months. By selecting higher months, you can expect higher profits as the investments are made in long term projects.
3.2 Please remember, you can not withdraw your funds until your duration is completed, even if there is any emergency. Hence plan your investments wisely and fix the duration. The best idea is to select a suitable duration and renew it further. You will be notified about renewal one month in advance before completion of your duration. If you are not willing to renew the investment, your total amount will be refunded on completion of the duration. Please note that it will take another 15 days time after completion of the duration to refund your amount.
3.3 The profit sharing Ratio is 80% for investors and 20% for the investment management company. What ever profits are earned, they are equally divided among the investors. However, based on duration of investments, the investments may be done in different projects and investments with longer duration may earn higher profits.
3.4 Profits are paid on 10th of every month. However this date can fluctuate up to 15th of the month in case of any delay in payments. Profits may fluctuate based on earnings. It may increase or decrease in any month and though very rare, you may not get profits in any month. You should be able to handle this fluctuation without any hassle as a halal investor.