Mudarbaha ppt


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Presentation on Mudarbah In Islamic Banks.

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Mudarbaha ppt

  1. 1.  Mubashir Hassan  Hafiz yasir  Qasim Nawaz  Waseem Baig  M.Saqib  Sidra Mehboob  Hassan Mujtaba 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
  2. 2.  Mudarba  Mudarba concept  Parties  Types of Mudarbah  Roles of Mudarib  Constitution  Structure  Rules and regulation for Rab-ul-mal & Mudarib  General rules and regulation  Regulatory Frame work
  3. 3.  Benefit to Rab-ul-Mal  Mudarba companies work in Pakistan  Updating the legal frame work  Transparency Regulatory control  Development of islamic capital market
  4. 4. Mudarba
  5. 5. AL-QURAN Believers, fear Allah and give up what is still due to you from usury, if you are believers; [SURAH AL-BAQARAH AYAH 278]
  6. 6. THE MODARABA- DEFINITION “Modaraba is a kind of partnership , wherein one party provides finance to other party for the purpose of carrying on business”
  7. 7. 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  Non-Banking Company  It deals with finance act as NBFC  Mudarabah is a product of Islamic bank
  8. 8. There are two parties invovle:  Rab-Ul-Mal (Invester)  Mudarib (Agent,working capital)
  9. 9.   1.Al Mudarabah Al Muqayyadah (Restricted Mudarabah)    2. Al Mudarabah Al Mutlaqah (Unrestricted Mudarabah)  
  10. 10.  Ameen (Trustee)  2. Wakeel (Agent)  3.Shareek (Partner)  4. Zamin (Liable)  5. Ajeer (Employee)
  11. 11.  He gives only money  He has no management skills  Rab-ul-Mal cannot ask to Mudarib  Where is my money?  Where to invest?
  12. 12.  Work as manager  He cannot invest in business  He knows about business term & condition  He works Seprately
  13. 13.  Has business skills.  Have knowledge about business management.  All decision are made by him.
  14. 14. 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 of Pakistan.
  15. 15. Modaraba Management Company (Modarib) Private/Public Limited Company with Board of Directors Modaraba Fund (Pool of Money of Rab-ul-Maal) Separate Legal Entity Regulator The Sector is monitored and regulated by the Registrar (Modaraba Companies and Modarabas) SECP Religious Board Authority which certifies that Prospectus of the Modaraba is Shari’ah Compliant Justice/Ex-Justice of a Court plus 2 Scholars Prospectus (business activities) STRUCTURE
  16. 16. Rab-ul-Mal has no right to ask why you make this decision 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
  17. 17.  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
  18. 18.  All expenses are being beard by the Rab-ul-Mal (office , rent etc)  Loss will beard by the Rab-ul-Mal  Profit Ratio will be predefined.
  19. 19.  Mudarib works individually  He cannot add partner  He cannot invest  Business related decisions are only made by Mudarib
  20. 20.  Mudarib invest according to his expertise.  All the personal expense will be beard by the Mudarib himself  Mudarib can hire new employee and his salary expense will be beard by the company.
  21. 21.  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
  22. 22.  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 from dividend  Mudarib can invest money in business in shape of share and stock  Rab-ul-mal has right to sale our business of any time
  23. 23.  It invest in stock exchange  It can invest in venture capital  Invest in the stock market  Indulge in Ijara, Morabaha and Musharaka Financing activities  Indulge in trading of Halal Commodities  Undertake project financing activities  Act as a venture capital company
  24. 24. 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
  25. 25.   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.
  26. 26.  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 determined.
  27. 27. 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.
  28. 28.  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.
  29. 29.     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)
  30. 30. 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
  31. 31.  Proposed Amendments in the Ordinance, Rules, Regulations and Guidelines governing the Modarabas companies and Modarabas  Relaxation of Prudential Regulations ◦ Statutory reserve requirement increased for capitalization ◦ relaxation in current assets to current liabilities ratios from 1 : 1 to 0.75:1
  32. 32.  New trends  Concept of Islamic Funds becoming popular  Increasing number of entrants  Regulatory challenges  Minimum equity requirement to be raised  Stringent eligibility/fit and proper criteria and performance benchmarks to be introduced, research capabilities to be improved  Investor base broadened: (public sector) provident and pension funds  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
  33. 33.  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
  34. 34. 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.
  35. 35.  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.