Prof. Dr. Mohd. Ma’sum Billah
No guarantee on deposits
No guarantee on returns
Flexible rate liability
Mudarabah is a type of contract where one of the parties provides capital and the other expertise, labour, and entrepreneurial skill to conduct a particular business where both parties would share profit .mudharabah enables both parties to make profit. According to the majority of the fiqh schools, the contract of mudharabah has three pillars. They are the parties that consist of the owner of the capital (sahib al mal) and the manager of the fund (mudharib or aamil), the subject matter of the contract which include the capital, the efforts, and the profit, and the expression which is made of the offer and acceptance. Conditions of Mudharabah
The parties should have the competence to become agents. The manager while investing the capital of the sahib al mal represents him. The capital should be in currencies that are commonly in circulation it is not allowed for the sahib al-mal to contribute in the form of goods or other immovable properties. The majority of the fiqh schools argue that it may lead to uncertainty as to the real amount of capital and the profit. This is because the price of the goods may fluctuate. The amount of the capital should be known. It is important as it may lead to a clear distinction between the capital and the profit. The capital should be present. It is, for instance, not allowed for a creditor to enter into a mudharabah with his debtor. The capital should be clearly mentioned, this is to separate it from the profit which will be made later. The capital should come to the complete possession of the mudharib. The division of the profit should be clearly defined on the basis of the proportionality.
In mudarabah financing
The bank gives the funds to the modarabah and the bank client provides the effort. He uses the fund to undertake an economic activity. When the business grows, it generates profit. The bank client pays back the principal plus the share in profits to the bank and for him he takes the share in profits, there is no wage. Division of the profit
It is not allowed that a mudharib should take his share of the profit without informing the owner of the capital. Any such division should be done in the presence of both parties. Distribution of the profit in mudarabah can only take place after the losses have been written off and the capital of the sahib al mal has been fully restored. Any distribution of profit before mudharabah comes to an end is considered as an advance taken from the profit. If the payment of zakat is not stipulated in a condition such payment is to be charged on the owner of the capital. Position of the Mudarib
The mudharib is a trustee. If the property or cash is destroyed or lost in his hand, he is not held responsible unless negligence or a willful act is proven. His statement accompanied by oath should accept. The mudharabah cannot claim any periodical salary or a fee for the work done by him for the mudharabah. The maintenance expenses of a mudharib are on him. He cannot take from the money invested for mudharabah. Termination of the project.
The mudharabah is terminated when it is cancelled or when a mudharib is prevented from using the fund, or when he is dismissed. mudharabah is terminated when one of the parties loses his capacity or when a mudharib fails in his duties, and his failure is willful, intentional and out of his negligence.
A project financing is a financing of a particular economic unit in which a lender is satisfied to look initially to the cash flows and earnings of that economic unit as the source of funds from which a loan will be repaid and to the assets of the economic unit as collateral for the loan. The ultimate goal in project financing is to arrange a borrowing for a project...