How can I take loan for business from Islamic bank?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

An Islamic bank may offer only an interest free loan which is known as qardh-e- hasana. However from a practical point of view, Islamic banks do not generally offer such a loan as an Islamic bank is an investment concern that earns profits/dividends for its partners through mudrabah, musharakah and other contracts.[1]

A mudarabah contract:

The Islamic bank will provide the capital and the client will provide his entrepreneurial skill to earn profit,

The profit will be shared between the two based on an agreed-upon ratio,

Any loss will be absorbed by the Islamic bank

A musharakah contract:

Both the Islamic bank and the client will provide capital,

The client will use his entrepreneurial skills to earn a profit,

The profit will be shared between the two based on an agreed-upon ratio,

If there is a loss, it will be pro-rata the initial investment.

For further details on mudarabah and musharakah, you may refer to the following link:

http://www.slideshare.net/abdullahsoleh5/an-introduction-to-islamic-finance-by

(Read from page 17)

And Allah Ta’āla Knows Best

Maaz Chati

Student Darul Iftaa
Blackburn, England, UK

Checked and Approved by,
Mufti Ebrahim Desai.