THE CONCEPT OF   MUDARBAH  Aamir Malik Head of Product Development Present at : Post Diploma on Islamic Banking and financ...
<ul><li>This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise. <...
Types of  Mudarabah <ul><li>Al Mudarabah Al Muqayyadah </li></ul><ul><li>(Restricted Mudarabah) </li></ul><ul><li>Al Mudar...
Al Mudarabah Al Muqayyadah (Restricted Mudarabah) <ul><li>In Al Mudarabah Al Muqayyadah, the Rabb-ul-Maal  specify a parti...
Al Mudarabah Al Mutlaqah     (Unrestricted Mudarabah) <ul><li>Rabb-ul-maal  gives full freedom to  Mudarib  to undertake w...
Profit & Loss Distribution <ul><li>Profit is clearly mentioned in contract in percentage not Lump sum or the percentage of...
<ul><li>If the profit ratio not decided at the conclusion of contract then  </li></ul><ul><ul><ul><li>Custom practice  </l...
<ul><li>It is not permissible to assign the profit of specific transaction. </li></ul><ul><li>Profit Distribution will be ...
<ul><li>Net profit is distribute </li></ul><ul><li>It is permissible for Mudarib to Invest capital in Mudarbah contract an...
Duties and Powers of Mudarib <ul><li>Best efforts to achieve goals </li></ul><ul><li>Mudarib is free to manage if the cont...
<ul><li>Minimization of risk </li></ul><ul><li>Custody of trustworthy place or person </li></ul><ul><li>Buying and selling...
<ul><li>Capital Provider cannot lay down restriction on the action of Mudarib like the partnership of another party or to ...
<ul><li>Conversion of Mudarbah into Musharka </li></ul><ul><li>Mudarib can accept the funds from third party. </li></ul><u...
<ul><li>Mudarib can assign some activities. </li></ul><ul><li>Capital provider can not impose the condition which restrict...
Liquidation of Mudarbah <ul><li>Non binding contract can be terminated unilaterally. </li></ul><ul><li>With the agreement ...
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Al huda presentation on mudarbah by aamir malik

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Al huda presentation on mudarbah by aamir malik

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

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