slideshow

Combination Musharakah and Mudharabah

Posted on 16th September 2012 by Camille Paldi,

West Hampstead, London, UK

Excerpt from Introduction to Islamic Finance

By Mufti Taqi Usmani

A contract of mudarabah normally presumes that the mudarib has not invested anything to the mudarabah.  He is responsible for the management only, while all the investment comes from rabb-ul-mal.  But there may be situations where mudarib also wants to invest some of his money into the business of mudarabah.  In such cases, musharakah and mudarabah are combined together.  For example, A gave to B Rs. 100,000/- in a contract of mudarabah.  B added Rs. 50,000/- from his own pocket with the permission of A.  This type of partnership will be treated as a combination of musharakah and mudarabah.  Here the mudarib may allocate for himself a certain percentage of profit on account of his investment as a sharik and at the same time he may allocate another percentage for his management and work as a mudarib.  The normal basis for allocation of the profit in the above example would be that B shall secure one- third of the actual profit on account of his investment and the remaining two- thirds of the profit shall be distributed between them equally.  However, the parties may agree on any other proportion.  The only condition is that the sleeping partner should not get more percentage than the proportion of his investment.

Therefore, in the aforesaid example, A cannot allocate for himself more than two- thirds of the total profit because he has not invested more than two- thirds of the total capital.  Short of that, they can agree on any proportion.  If they have agreed on that the total profit will be distributed equally, it means that one- third of the profit shall go to B as an investor, while one fourth of the remaining two- thirds will go to him as a mudarib.  The rest will be given to A as ‘rabb-ul-mal.’


Posted on 16th September 2012 by Camille Paldi


Comment on this post







Twitter

    • 5th July @camille paldi
    • Islamic banks' finances surge 107 per cent in Oman - http://t.co/XFjX2oX5Br #GoogleAlerts
    • 5th July @camille paldi
    • Legal Frameworks for Sukuk Issuance - http://t.co/sqwKZchlpN #GoogleAlerts
    • 4th July @camille paldi
    • What distinguishes Islamic banking from conventional banking - http://t.co/jWHCbKKMtV #GoogleAlerts
    • 4th July @camille paldi
    • Fitch: Oman Central Bank Shows Commitment to Islamic Banking - http://t.co/D5s7puwdxz #GoogleAlerts
    • 4th July @camille paldi
    • Fewer companies make Shariah-compliant list - http://t.co/Gya9HBYml0 #GoogleAlerts
    • 2nd July @camille paldi
    • Takaful endowed with high potential in Southeast Asia - http://t.co/BtPblGlg2K #GoogleAlerts
    • 2nd July @camille paldi
    • Islamic Management and Governance Centre to be set up in Dubai - http://t.co/G48zS7y0zH #GoogleAlerts
    • 2nd July @camille paldi
    • Qatar Islamic Bank raises QAR2bn with Tier 1 sukuk - http://t.co/q3kUgkI3K5 #GoogleAlerts
    • 2nd July @camille paldi
    • Malaysia's Agrobank becomes fully Islamic - http://t.co/31GD4g6hor #GoogleAlerts
    • 2nd July @camille paldi
    • Germany's first interest-free Islamic bank opens in Frankfurt - http://t.co/9UexmJDn4f #GoogleAlerts
    • 2nd July @camille paldi
    • Oman central bank sets up Islamic banking department - http://t.co/HBGU2lEFui #GoogleAlerts
    • 2nd July @camille paldi
    • Banks in Oman see growing demand for personal finance - http://t.co/r3qYvKV8AX #GoogleAlerts
    • 1st July @camille paldi
    • AAOIFI Standard Number Five – Guarantees - http://t.co/qzmcvL4Ljk #GoogleAlerts
    • 1st July @camille paldi
    • Egyptian Takaful Non-life eyes USD1.3m premiums in FY2015-16 - http://t.co/Mg3qMe25iH #GoogleAlerts
    • 1st July @camille paldi
    • Takaful endowed with high potential in Southeast Asia - http://t.co/BtPblGlg2K #GoogleAlerts
    • 1st July @camille paldi
    • Abu Dhabi free zone publishes draft rules for financial firms - http://t.co/p6XwCxW3yR #GoogleAlerts
    • 1st July @camille paldi
    • My vision as City minister: I want UK finance to be the world's most competitive - http://t.co/tA67Tv2MBN #GoogleAlerts
    • 1st July @camille paldi
    • Noor Bank rings bell to celebrate listing of its debut $500 million Sukuk on Nasdaq Dubai - http://t.co/aEWKbHBV4e #GoogleAlerts
    • 30th June @camille paldi
    • Kazakhstan introduces changes to obligatory insurance and Islamic finance laws - http://t.co/7Tr7B0SYZj #GoogleAlerts
    • 29th June @camille paldi
    • IFC and Ghanaian companies partner to build extractive industry - http://t.co/9LIf5KaNiY #GoogleAlerts

Articles

Reforming Economics and Finance in the Light of Abrahamic Principles

Reforming Economics and Finance in the Light of Abrahamic Principles

Introduction

The modern day economic system is built upon and around interest-based lending, which allows one class of people to grow rich at the expense of the majority of the population. Interest has been prohibited in all Abrahamic religions for essentially the same reaso...

Posted on 1st July 2015 by Camille Silla Paldi

China's Entry to the Islamic Finance Market

China's Entry to the Islamic Finance Market

 

By Matthew Pendrey

Assistant Director at The Royal Bank of Scotland

 

 

In April 2015, Qatar International Islamic Bank signed an historical agreement with Southwest Securities, based in Chongqing, to develop Shari'ah-compliant finance across ...

Posted on 1st July 2015 by Matthew Pendrey

Islam Explains Why Interest is Prohibited in the Bible and Torah

Islam Explains Why Interest is Prohibited in the Bible and Torah

 

By Camille Paldi, CEO of FAAIF, camille@faaif.com

 

 

Lending money is not prohibited in the Bible. What is prohibited is charging abusively high interest. This is because high-interest loans...

Posted on 6th June 2015 by Camille Silla Paldi

The Changing Face of Banking in Dubai

The Changing Face of Banking in Dubai

The Changing Face of Banking in Dubai

Posted on 30th May 2015 by Matthew Pendrey

Video

Find all our videos here, and also a link to our YouTube video channel so you can view our 'video of the week'

Submit

We would like you to get involved with our site. So if you want to submit Articles, Videos, Events and Call for Papers, please click the button below:

Submit

Valid XHTML 1.1 |  Valid CSS |  Web Design in Durham and Newcastle |  Copyright © 2015

* Prices are converted at USD$0.2723 per AED 1