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April 8, 2022


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In the modern economic system, Islamic banks are mostly using the debt-creating modes of trade and leasing for their financing activities, while the main basis for mobilising deposits from the public are the partnership modes of Musharakah and Mudarabah. Both modes belong to profit-and-loss sharing or the risk-sharing techniques involved in partnerships. If the financier wants to finance the whole project, the form of Mudarabah can come into operation. If investment comes from both sides, the form of Musharakah can be adopted.

time that can be renewed. It could be used to finance industry, trade, real estate, contracting and almost all legal enterprises through partnership. A Musharakah business or its assets can also be securitised by selling Musharakah Certificates in the market. The Musharakah Certificate represents the ownership of the holder in a proportion of the assets of the project. It could be sold in the marker only if it represents non-liquid assets. If the certificate only represents a proportion of liquid assets of the project; it could not be sold in the market except, as it could be assimilated to a trade of money and thus would be similar to Riba. In addition, the returns of the Islamic bank in Musharakah have been tied up with the actual profits accrued through the enterprise. Thus the client is required to provide the bank periodically with the results of operations of the business. The bank should also share the losses of the business. And if the enterprise earns enormous profits, all of it cannot be secured by the industrialist exclusively, but they will be shared by the common people as depositors in the bank. And since financial institutions do not normally want to remain partner of a specific project for good, they can sell their share to other partners of the project as aforesaid.  

Course Content


Course Curriculum

    • Combination of Musharakah and Mudarabah 00:20:00
    • Management of Musharakah 00:05:00
    • Diminishing Musharakah 00:20:00
    • Mudarabah – Distribution of Profit 00:20:00
    • Musharakah – Distribution of Profit 00:07:00
    • Shirkat-ul-Milk and Shirkat-ul-Aqd 00:20:00
    • Nature of Capital 00:20:00
    • Ratio of Profit 00:05:00
    • Sharing of Loss 00:03:00
    • Termination of Mudarabah 00:12:00
    • Termination of Musharakah 00:15:00
    • Mudarabah as a Mode of Finance 00:25:00
    • Musharakah as substitute for regular overdraft 00:15:00

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