upport AboutIslam in the Best 10 Days of the Year

Is Taking a Loan for Investment Permissible?

18 June, 2022
Q As-salamu `alaykum. Sheik, I am writing from Sri Lanka. We have a land in a village area. Still there is no proper road to that land. We want to sell some of the portion of our land. We can increase the value of the land by constructing a road to it; it’s costly because our land situated on a hill. My question is: can we borrow money to construct the road as investment; hence we can share the profit of selling the land? If it’s OK, then from which amount we have to share the profit? Will it be from the increased value of land after constructing the road? Looking forward to hearing your answer. Jazaka Allah khyran.


Wa `alaykum as-Salamu wa rahmatullahi wa barakatuh.

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

All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.

Ads by Muslim Ad Network

In this fatwa:

There is no investment on the basis of a loan. Rather, there should be a partnership or any other lawful (halal) means of Islamic investment.

In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:

Ads by Muslim Ad Network

The word ‘borrowing’ is never used in Islamic finance. Nobody will give you a loan without getting return and any return on a loan is prohibited because this is exactly what riba is.

You seem to be hinting to getting finance on sharing basis; in this case what I suggest is the following:

Create a partnership between the land owner and the funds provider. The principal of the land owner is the fairly evaluated price of the land as it is now while funds for construction of the road are known; you assign a part of the profit for the management of the project, say 20% and divide the rest in proportion to principal contribution.

The net profit is the difference between total principal of the two partners and the price of selling the land then.

Allah Almighty knows best.

Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.

About Prof. Dr. Monzer Kahf
Dr. Monzer Kahf is a professor and consultant/trainer on Islamic banking, finance, Zakah, Awqaf, Islamic Inheritance, Islamic estate planning, Islamic family law, and other aspects of Islamic economics, finance, Islamic transactions (Mu'amalat). Dr. Monzer Kahf is currently Professor of Islamic Finance & Economics at the Faculty of Economics and Management, Istanbul Sabahattin Zaim University, Turkey