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Expatriates and Share Market

Expatriates and Share Market

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Shamsudheen, Pravasi Bandhu

Topics discussed

Share market
Permanent Account number card & things required for it.
Short term capital tax
Unit link investment plans


dear sir i want full detail for bajaj insurance & investment in share market

i heared about your “Expatriates and Share Market” please explain what is the stand of islam on share market / insurance / mutual fund….. please

Dear Mr Abdul Kader,

When we are doing a small business with two person with equal
investment, we will say we both are having 50% shares in that

Similarly large projects are funded by large number of individuals
and institutions by subscribing shares of that company. The face value
of the shares will be from Rupee one to Rs 10.

There is no difference when we are doing business with two share
holders or thousand of share holders.

Most important is what business we are doing or shares of which
companies you are buying. We have the freedom to buy or subscribe
shares of companies on our choice. Invests are permitted in the
companies which involve the manufacturing of steel, cement, medicines, textiles, automobiles, machineris, etc.

At the same time we could avoid the companies which involve in the
manufacturing of liqueur, tobacco, companies involve in interest like
banks and finance companies, etc.

According to me, if we invest in the companies which are involving in
the activities permitted to us there is no harm if we invest in
Islamic angle.

I feel if you invest in Mutual funds which only invest in shares, that too shares permitted to us, there is no harm.

When we invest in shares or mutual funds which invest in shares will
not give any guarantee for your capital, there will not be any
guarantee on return as dividend and capital appreciation.

There are mutual funds which invest in debt instruments by which they
will give fixed income, are not suitable in Islamic principle, because
interest is its income.

There are companies in the Gulf providing insurance in Islamic
principle, they have Sharia compliance officers. So there is no harm
taking such insurance policies.


K V Shamsudheen

is there a problem of gambling when investing in share market??

Dear Mr. Irfan,

In stock market speculation is considered as gambling. Normaly speculators trade with margin.

When people are doing speculative trading they will try to make quick money. For that they will start margin trading.

For example if you have one hundred thousand you will get an opportunity to trade five times. Such case when you loose 20% you will loose complete.

Where as when you you trading with your money cash in hand if the there a loss of 20% you will loose only 20,000 and 80,000 will remain.

One must be careful on speculation with margin.

With regards

K V Shamsudheen

thanks for the reply.

what is the islamic ruling on trading in currency ??

Abū Sa’īd al-Khudri said that Bilāl brought the Prophet some Barni
dates, and when he asked him where he had gotten them he replied: “I
had some inferior quality dates so I exchanged two Sa’s of them for
one Sa’ (of this).” The Prophet responded: “Ah! This is the very
essence of Ribā, the very essence of Ribā! Do not do so, but when you
wish to buy, sell the dates in a separate transaction, then buy with
what you get.”
(Bukhāri, Muslim)

now when we trade in currency , although both are paper , they only differ in the value. hence we are trading the same commodity of different value/quality. the trade is hence unbalanced ,since one is inferior.
which is similar to trading 1 good quality date for 2 infeior quality dates. although both the dates are of different type, the exchange based on the agreement was considered as the essence of riba.

could you shed more light on this ??

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