Al huda presentation on mudarbah by aamir malik
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Al huda presentation on mudarbah by aamir malik

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Al huda presentation on mudarbah by aamir malik Al huda presentation on mudarbah by aamir malik Presentation Transcript

  • THE CONCEPT OF MUDARBAH Aamir Malik Head of Product Development Present at : Post Diploma on Islamic Banking and finance Class
    • This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise.
    • The investment comes from the first partner who is called “Rabb-ul-Maal” ( Investor) while the management and work is an exclusive responsibility of the other, who is called “Mudarib” ( Working Partner) and the generated profits are shared in a predetermined ratio.
    Definition
  • Types of Mudarabah
    • Al Mudarabah Al Muqayyadah
    • (Restricted Mudarabah)
    • Al Mudarabah Al Mutlaqah
    • (Unrestricted Mudarabah)
  • Al Mudarabah Al Muqayyadah (Restricted Mudarabah)
    • In Al Mudarabah Al Muqayyadah, the Rabb-ul-Maal specify a particular business or a particular place to mudarib .
  • Al Mudarabah Al Mutlaqah (Unrestricted Mudarabah)
    • Rabb-ul-maal gives full freedom to Mudarib to undertake whatever business he deems fit, this is called Al Mudarabah Al Mutlaqah (unrestricted Mudarabah )
  • Profit & Loss Distribution
    • Profit is clearly mentioned in contract in percentage not Lump sum or the percentage of capital.
    • It is not permissible to earn a share of profit in addition to a fee in Mudarbah contract.
    • consent of partners on profit distribution
    • it is permissible to amend the contract and set the duration of contract.
    • If the profit ratio not decided at the conclusion of contract then
        • Custom practice
        • Equal distribution
        • Market Rate of Services
    • Demand of Lump sum Amount, contract will be void.
    • It is not permissible for the Capital Provider to provide two amount one for Mudarib and other for himself profit and financial period as well.
    • It is not permissible to assign the profit of specific transaction.
    • Profit Distribution will be after the maintained Capital.
    • Loss is compensate first
    • If the total losses are greater then the total revenues, they will be deduct from capital and Mudarib receive nothing.
    • Net profit is distribute
    • It is permissible for Mudarib to Invest capital in Mudarbah contract and also can enjoy the profit on share and Mudarib.
  • Duties and Powers of Mudarib
    • Best efforts to achieve goals
    • Mudarib is free to manage if the contract is unrestricted.
    • appointment of another person
    • Selection of market and places to minimize the risk.
    • funds are under custody of trustworthy person or institution.
    • Selling and buying on Deferred payments
    • Minimization of risk
    • Custody of trustworthy place or person
    • Buying and selling on deferred basis
    • Restrictions on Mudarib by Rab ul Mall
    • it is not permissible for Rab ul Mall to stipulate Mudarib to act in Management but Mudarib can refer some activities.
    • Capital Provider cannot lay down restriction on the action of Mudarib like the partnership of another party or to stipulate to invest his funds in Mudarbah contact.
    • Mudarib responsibilities are set in the contract and if one of them activity is out sourced
    • Conversion of Mudarbah into Musharka
    • Mudarib can accept the funds from third party.
    • It is permissible for capital provider to place the restrictions on the action of mudrib (time, place, sectors,)but their availabity should be common.
    • Capital provider cannot stipulate on the right to work.
    • Mudarib can assign some activities.
    • Capital provider can not impose the condition which restrict the movement of Mudarib like he or she must enter in Musharkah contract.
    • Mudarib cannot outsource liability.
    • Cannot sell the less than market price or buy on high price.
    • Loan or gift are not permissible
    • Living expenses but as per approval of capital provider.
  • Liquidation of Mudarbah
    • Non binding contract can be terminated unilaterally.
    • With the agreement of both parties
    • On the date of maturity
    • In case of losses
    • Death of Mudarib or the liquidation of institution acts as the Mudarib