If somebody entrusts you with some money, for example �1000. they have not borrowed the money to you but have just given it to you for safe keeping.
Can I Invest that money in Halal finance, and benefit from the profits? Or does the money earned through profit have to be given to the rightful owner? Can you please advise!
Al-jawab billahi at-taufeeq (the answer with Allah's guidance)
Deposit is permissible, and recommended, with proofs based on the Quran, Hadith and Ijma'.
Allah Ta'ala says,
"Verily! All�h commands that you should render back the trusts to those, to whom they are due; and that when you judge between men, you judge with justice.Verily, how excellent is the teaching which He gives you! Truly, All�h is Ever All� Hearer, All� Seer. " (4:58)
"And if you are on a journey and cannot find a scribe, then let there be a pledge taken (mortgaging); then if one of you entrust the other, let the one who is entrusted discharge his trust (faithfully), and let him be afraid of All�h, his Lord. And conceal not the evidence for he, who hides it, surely his heart is sinful. And All�h is All-Knower of what you do. " (2:283)
Prophet (Sallallahu Alaihi Wasallam) said, "Return trusts to the one who entrusted you, but do not betray the one who betrayed you." (Abu Dawud and Tirmidhi)
Jurists throughout the history of Islam have agreed that the deposit contract is permissible, based on the need of asking others to hold one's property for safekeeping.
The deposit contract makes it binding on the depositary to safe keep the owner's property, following the Prophet (Sallallahu Alaihi wasallam) Hadith, "Muslims are bound by their conditions." A depositary will be rewarded for his efforts for safe keeping.
Also, Jurists of all school has agreed that if the deposit is adversely affected due to his negligence or transgression then he must guarantee it, this ruling is based on the Hadith: "The non-transgressing depositary does not guarantee the deposit".
(Quduri, Al Fiqhul Islami Wa Aillatuhu)
Regarding to your query above, because you have already invested the deposit money of the depositor, you will have to compensate the deposit amount and the profit you gained from it must be given to charity. The objective of this contract is only for safe keeping and not for investing in it.
There are other alternative for investing money in Islam such as, Musharakah, where all partners invest some capital into a commercial enterprise. And Mudarabah, where one partner (investor) gives money to another (laborer) for investing it in a commercial enterprise.
