Gift & Charities by Sharia Flaunting Company
Q: Sir, A trading company is mobilizing investment in the name of Halal business, promising the investors huge returns. It is also seen making a lot of charities, setting up computer labs, distributing computer tablets among journalists of Urdu newspapers, funding construction in madrassas, distributing scholarships and adopting schools. It is also seen sponsoring recitation contests. It claims that it has made investments in precious metals like gold and silver and also deals in hard metals like iron and nickel. Hundreds of Muslims have invested their money in the firm. The returns being promised by the company seem to be unreasonably high. Moreover, even Tatas and Birlas do not make charities on this scale even though their standing in the investors market is old and their profits are impressive. Kindly enlighten us if what is going on is on the right lines and how should an average Muslim judge the companies that claim Halal trading.
Safeer Ahmed, Vijayanagar, Bangalore
Editor Islamic Voice replies:
We are not aware as to which company you are referring to while raising this query. However, a few general suggestions could be made to check the credentials of the company that you claim to be offering impressive returns and engaging in charities:
1- Check as to what is the status of the company, i.e., partnership, Private limited or Limited company.
2- Who are the promoters, ask for their CVs and look at their past record.
3- Check if the company has been permitted by the Securities and Exchange Board of India (SEBI) and Reserve Bank of India to mobilize investment as a “Non-Banking Financial” entity.
4- If one is dealing in gold/silver one has to confirm a- if it has the membership of the Karnataka Jewellers Association, b-If it has strongroom or vault for safekeeping of precious metals.
5- See if they have obtained VAT registration no. from the competent authority.
6- If they claim that they import gold etc, check if they have licence to import gold. For terms and conditions for import of gold click on the following link:
7- Check if they have warehouses for storing hard metals like iron and nickel.
8- Also ask for audited accounts for the previous years.
The Government of India has laid down stringent rules for mobilizing investments from the general public. Those who do not follow these rules may be running what is called Ponzi schemes like Sarada Chit Funds etc. They are liable for action, if found violating the rules.
Kindly note that anything that deals with riba (interest), liquor, pork, or other prohibited items from the point of sharia, are not to be traded by a believer. Check with the promoters if they have any such dealings.
Any company doing serious business cannot afford to recklessly spend money for charitable causes. There are rules under which they have to reinvest certain part of their profits into some business and set apart 2% of the profit for CSR (Corporate Social Responsibility) head which can be donated to some registered NGO.
It will be therefore advisable to satisfy oneself from all these angles before deciding to invest in any such company.