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    Qirad Meaning 'Surrender' Is Used To Refer To The Surrender of Capital, Hence The

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    SK Lashari
    Mudarabah is an alternative name for muqaradah, which refers to the surrender of capital. It is a form of finance where an investor (rabb al-mal) provides capital to an entrepreneur (mudarib). The mudarib manages the capital and contributes their management skills. Key conditions of modern mudarabah contracts are that profits are shared according to an agreed ratio, ownership of assets remains with the investor, losses are shared proportionally to capital contributions, and the mudarib's compensation is limited to a share of any profits. Mudarabah can be structured as a direct agreement between an investor and entrepreneur, or it can involve an intermediary that pools funds from multiple investors.

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    Qirad Meaning 'Surrender' Is Used To Refer To The Surrender of Capital, Hence The

    Uploaded by

    SK Lashari
    100 views2 pages
    Mudarabah is an alternative name for muqaradah, which refers to the surrender of capital. It is a form of finance where an investor (rabb al-mal) provides capital to an entrepreneur (mudarib). The mudarib manages the capital and contributes their management skills. Key conditions of modern mudarabah contracts are that profits are shared according to an agreed ratio, ownership of assets remains with the investor, losses are shared proportionally to capital contributions, and the mudarib's compensation is limited to a share of any profits. Mudarabah can be structured as a direct agreement between an investor and entrepreneur, or it can involve an intermediary that pools funds from multiple investors.

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    Mudarabah

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    Mudarabah is an alternative name for muqaradah, which refers to the surrender of capital. It is a form of finance where an investor (rabb al-mal) provides capital to an entrepreneur (mudarib). The mudarib manages the capital and contributes their management skills. Key conditions of modern mudarabah contracts are that profits are shared according to an agreed ratio, ownership of assets remains with the investor, losses are shared proportionally to capital contributions, and the mudarib's compensation is limited to a share of any profits. Mudarabah can be structured as a direct agreement between an investor and entrepreneur, or it can involve an intermediary that pools funds from multiple investors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    100 views2 pages

    Qirad Meaning 'Surrender' Is Used To Refer To The Surrender of Capital, Hence The

    Uploaded by

    SK Lashari
    Mudarabah is an alternative name for muqaradah, which refers to the surrender of capital. It is a form of finance where an investor (rabb al-mal) provides capital to an entrepreneur (mudarib). The mudarib manages the capital and contributes their management skills. Key conditions of modern mudarabah contracts are that profits are shared according to an agreed ratio, ownership of assets remains with the investor, losses are shared proportionally to capital contributions, and the mudarib's compensation is limited to a share of any profits. Mudarabah can be structured as a direct agreement between an investor and entrepreneur, or it can involve an intermediary that pools funds from multiple investors.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Mudarabah

    Qirad meaning 'surrender' is used to refer to the surrender of capital, hence the
    alternative name for mudarabah which is muqaradah. The term mudarib, a user of the
    capital of an investor (the investor being the rabb al-mal), gives rise to the alternative
    description of this form of finance, hence mudarabah. The mudarib, regarded as an
    entrepreneur, contributes management input, itself viewed as a form of capital. Widely
    agreed conditions applied to modern mudarabah contracts are that:

    a) the investor is an investor on a non-executive basis


    b) according to Imam Hanifa, the contribution of capital to the mudarabah is to be made
    in the form of cash. Imam Malik however argues that a non-cash contribution can be
    made provided that its cash value can be established prior to employment in the
    partnership. Thus material contributions must first be valued or sold for cash before
    establishing the contributor's share in the mudarabah.
    c) a profit share between mudarib(s) and investor(s) is agreed at the outset. Profits can
    be shared in any ratio agreed at the outset of the mudarabah.
    d) ownership of the invested assets remains with the investor at all times.
    e) losses should be shared according to the financing share of each financier. The
    financier's maximum loss is limited to his share of the financing and the mudarib must
    not bear any of loss attributable to invested capital. Any liability is limited to the extent of
    the total capital contribution made by the investors, except where such an investor has
    allowed the mudarib to incur debts on his behalf.
    f) with the permission of the investor, the mudarib may contribute some of his own
    capital to the project or raise fresh capital from others on the basis of mudarabah.
    g) the mudarib may only lend available funds with the permission of the investor.
    h) the mudarib is not allowed to draw remuneration in any other form than profit-share.
    In the absence of a guaranteed wage, the entrepreneur has no recompense for his
    efforts unless the project is profitable.
    i) mudarabah may be enacted as a single-tier agreement in which the investor deals
    directly with the entrepreneur. In a two-tier mudarabah, investors pool their funds with
    an intermediary who subsequently deals with entrepreneurs.
    j) the mudarib may be required by investors to engage only in strictly defined activities in
    which case the mudarabah becomes one of mudarabah al-muqayadah. Where no
    restrictions apply, the mudarabah becomes one of mudarabah al-mutlaqah.

    k) Imams Hanifa and Hanbal argue that the term of a mudarabah can be restricted,
    whilst Shafi and Malik argue against any such restriction.

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