MOHD FARIS IKHWAN BIN KHALIL

MOHAMMAD SHAFIQ IKMAL BIN NOR SHAHARIM

MUDHARABAH
Definition:
A type of partnership (sharaka or musharakah) for profit (ribh) which is structured so that one
party (rabb al-mal) provides capital (funds or mal) and the other party (al-mudharib) provides
labor and expertise ('amal and khibra)

Operation:

Profit shared at an agree ratio

Loss will be borne by rabb al-mal, al-mudharib only loss of effort

Essential Elements:

Sighah (ijab & qabul)

Contracting parties (rabb al-mal & al-mudharib)
Subject matter (capital & profit)

Rules and Conditions:

1. Mudharabah capital
a. In the form of cash (movable/immovable cannot)
b. Present during the conclusion of the contract
c. Determined in terms of value and be delivered to mudarib

2. Mudharabah profit
a. Mechanism for distributing profit must be clearly known
b. In ratio or percentage form
Types:
1. Restricted mudarabah (Al-Mudarabah Al-Muqayyadah)
a. The rabb al-mal may specify a business in which to invest, in which case
the mudharib is restricted only to such business as pointed out by rabb al-mal.
2. Unrestricted mudarabah (Al-Mudarabah Al-Mutalaqah)
a. If rabb al-mal has not specified a business in which to invest.

Termination:
On the date of maturity
Fund of contract exhausted or suffered loss
Death of mudaribnor
Liquidation of institution that acts as mudharib
Insanity of the party in the contract

1. The customer places an investment of MYR1000 in a mudharabah unrestricted

investment account
2. The customer and the bank mutually agree on the profit-sharing-ratio.
3. The bank invests the fund in Shariah compliant investmet activities without any
restriction from the customer on management of the fund.
4. Should the investment generate profit, both parties shall share the profit based on the
predetermined profit-sharing ratio. In the case of loss, the customer shall solely bear the
financial loss. The bank shall only be financially liable if the loss is due to its misconduct
or negligence.

Customer (Rabb al-Mal) Islamic Bank (Mudarib)

Customer (Rabb al-Mal) = Islamic Bank (Mudarib) Unrestricted Investment
Customer Islamic Bank
Bear Profit Profit
&Loss