View stunning SlideShares in full-screen with the new iOS app!Introducing SlideShare for AndroidExplore all your favorite topics in the SlideShare appGet the SlideShare app to Save for Later — even offline
View stunning SlideShares in full-screen with the new Android app!View stunning SlideShares in full-screen with the new iOS app!
Roll No 13-0 2
Roll No 13-10
Roll No 13-28
Roll No 13-48
Roll No 13-53
Roll No 13-54
Roll No 13-55
Types of Mudarbah
Roles of Mudarib
Rules and regulation for Rab-ul-mal & Mudarib
General rules and regulation
Regulatory Frame work
Benefit to Rab-ul-Mal
Mudarba companies work in Pakistan
Updating the legal frame work
Transparency Regulatory control
Development of islamic capital market
Believers, fear Allah and give up
what is still due to you from usury, if
you are believers;
[SURAH AL-BAQARAH AYAH 278]
THE MODARABA- DEFINITION
“Modaraba is a kind of partnership , wherein one
party provides finance to other party for the
purpose of carrying on business”
Modaraba is one of the prime modes of Islamic Financial System. The
concept of Modaraba was given FOURTEEN HUNDRED YEARS
back by our Holy prophet Hazrat Muhammad (Peace be upon him).
100% Islamic concept
It deals with finance act as NBFC
Mudarabah is a product of Islamic bank
There are two parties invovle:
Mudarib (Agent,working capital)
1.Al Mudarabah Al Muqayyadah
2. Al Mudarabah Al Mutlaqah
He gives only money
He has no management skills
Rab-ul-Mal cannot ask to Mudarib
Where is my money?
Where to invest?
Work as manager
He cannot invest in business
He knows about business term & condition
He works Seprately
Has business skills.
Have knowledge about business management.
All decision are made by him.
CONSTITUTION OF MODARABA COMPANIES AND MODARABA
In 1980 Zia-ul-haq Islamization all financial institutions
operating in Pakistan
The Modaraba Companies & Modaraba (Floatation & Control)
Ordinance, 1980 and Modaraba Companies and Modarabas
Rules 1981, were promulgated in the early 80’s by the Government
Modaraba Management Company (Modarib)
Private/Public Limited Company
with Board of Directors
(Pool of Money of Rab-ul-Maal)
Separate Legal Entity
The Sector is monitored and regulated by the
(Modaraba Companies and Modarabas)
Authority which certifies that Prospectus of the
Modaraba is Shari’ah Compliant
Justice/Ex-Justice of a Court plus 2 Scholars
Rab-ul-Mal has no right to ask why you make this
Only Rab-ul-mal can invest.
All assets are owned by Rab-ul-Mal
He has right to check and balance on mudarib but
have no right to interept in Mudarib decision making
Rules and Regulation for Rab-ul-Mal
He cannot interfere in mudarib business
He cannot ask about our money & investment
He provide only capital
Loss only bear by rab-ul-mal
If loss done by mudarib then loss bear by
together(Negligence of mudarib)
All asset owned by rab-ul-mal
All expenses are being beard by the Rab-ul-Mal (office ,
Loss will beard by the Rab-ul-Mal
Profit Ratio will be predefined.
Mudarib works individually
He cannot add partner
He cannot invest
Business related decisions are only made by
Mudarib invest according to his expertise.
All the personal expense will be beard by the
Mudarib can hire new employee and his salary
expense will be beard by the company.
Personal expenses beared by own
If mudarib hired any employee then company will
pay their expenses
In case of loss hired employee cannot ask about
his salary from Mudarib
Rab-ul-mal trust on the abilities of mudarib
According to PAKISTAN law (90%) share of Rab-ul-mal
and (10%) share hold by mudarib
According to PAKISTAN law mudarib can received profit
Mudarib can invest money in business in shape of share
Rab-ul-mal has right to sale our business of any time
It invest in stock exchange
It can invest in venture capital
Invest in the stock market
Indulge in Ijara, Morabaha and Musharaka Financing
Indulge in trading of Halal Commodities
Undertake project financing activities
Act as a venture capital company
THE REGULATORY FRAMEWORKTHE REGULATORY FRAMEWORK
The Rules & Regulations and the regulatory framework applicable to Modaraba
and the Modaraba Companies are:
The Modaraba Companies & Modaraba (Floatation & Control) Ordinance,
1980- registration of Modaraba Companies and floatation, management and
regulation of Modarabas.
- The Modaraba Companies & Modaraba Rules, 1981
- The Companies Ordinance , 1984
- The Religious Board
- Prudential Regulations for Modaraba
Mudarabah can be terminated any time by giving notice.
If Mudarabah was for a particular term, it will terminate at
the end of the term.
Termination of Mudarabah means that the Mudarib
cannot purchase new goods for the Mudarabah.
However, he may sell the existing goods that were
purchased before termination.
If all assets of the Mudarabah are in cash form at the
time of termination, and some profit has been earned on
the principal amount, it shall be distributed between the
parties according to the agreed ratio.
If the assets of Mudarabah are not in cash form, they will
be sold and liquidated so that the actual profit may be
BENEFIT TO RABB-UL-MAL
One party has the funds but does not have the expertise and another party
has the expertise but does not have the funds. Modaraba gives opportunities
to both the parties i.e. Modarib and Rabb-ul-Mal to join hands for the
business under the Shariah.
Rabb-ul-Mal can liquidate his or her investment anytime by selling his/her
Modaraba Certificate through Stock markets to other Rabb-ul-Mal.
In Pakistan, the income of a Modaraba is tax free if the Modarib distributes
90% of the profit to Rabb-ul-Mal earned in any single year.
Modaraba Sector has continuously been playing an
active role in the growth of Pakistan’s economy.
During the last two decades, the Modaraba Sector
has enrolled its place in the financial intermediaries
of Pakistan and has been able to create a market
niche for themselves in the corporate sector.
2008 2009 2010 2011 2012
No. of Management Companies 30 27 24 24 24
No. of Modarabas 32 28 25 25 24
Paid up Capital 7,827 7,406 6,999 6,644 7,175
Total Equity 8,401 9,233 10,062 10,062 11,456
Total Assets 17,574 21,131 23,736 23,736 29,281
Total Income 4,140 3,939 5,025 5,025 6,583
Leasing Income 3,066 2,966 3,082 3,082 4,631
Musharaka & Morabaha Income 271 323 410 410 624
Miscellaneous & Other Income 803 650 1,533 1,533 1,327
Net Profit after Tax 956 794 811 811 962
(Rs. in million)
1) Financial link mudarabah
2) First Allied bank mudarabah
3) First equity mudarabah
4) First general leasing mudarabah
5) First Habib bank mudarabah
6) First Punjab mudarabah
7) Industrial capital mudarabah
Proposed Amendments in the Ordinance, Rules,
Regulations and Guidelines governing the Modarabas
companies and Modarabas
Relaxation of Prudential Regulations
◦ Statutory reserve requirement increased for
◦ relaxation in current assets to current liabilities ratios
from 1 : 1 to 0.75:1
Concept of Islamic Funds becoming popular
Increasing number of entrants
Minimum equity requirement to be raised
Stringent eligibility/fit and proper criteria and performance
benchmarks to be introduced, research capabilities to be
Investor base broadened: (public sector) provident and pension
International best practices to be implemented across the sector
Industry Association’s role to be strengthened, in the areas of
training, examinations and licensing of intermediaries
Placement of quarterly accounts on website
Placement of shares either with the SECP
Joint Forum of the SECP/SBP on Islamic Financial Services
Code of Corporate governance
AAOIFI (Accounting and Auditing Organization for Islamic
Financial Institutions) Bharain, 1991
Membership of Islamic Financial Services Board
Industry Associations- product development
Shariah Boards on every institution
Holistic legislation, standardization and
harmonization to avoid conflict and overlap.
Joint Initiative of the IDB (Islamic Development
Bank) and IFSB (Islamic Financial Services Board)
Ten year framework for the Islamic financial industry
development. General regulatory framework for
Islamic financial services industry.