What Is A Mudaraba Agreement

A – It is permissible to transfer mudarabah contracts in light of the legal principle that the agent`s partner may be used in Mudarabah`s transactions under the following conditions: The parties agree that the following terms used in this agreement have the following meanings: Given the legality of Mudarabah from the point of view of Shari`ah, the Board of Directors sees no obstacle to the purchase of goods on the international market with funds raised in partnership by other Islamic banks and financial institutions, and then to take over the management of the transaction (as agent manager) as Mudarabah, in which it also participates as an investor, whether its operations are short-term or long-term , or in the form of a trust sale, such as Murabahah, or a sale of ordinary bargains. (c) The management of the institution with respect to the project is in no way considered to be an influence on the client`s responsibility to the institution, with respect to other entities granted under another agreement between the client and the institution, whether or not the proceeds of these funds were used in the project. Profits and losses divided into PLS are those of a company or person that has received capital from the Islamic bank/financial institution (the terms “debt,” “credit,” “credit” and “lender” are not used). Since the financing is repaid, the investor withdraws an agreed percentage of the profit (or deducted in case of losses) with the financing capital. [Note 1] Unlike a conventional bank, there is no fixed interest rate levied with the principal of the loan. [3] Unlike the conventional banking sector, PLS also acts as a capital partner (in the mudarabah form of PLS), which acts as an intermediary between, on the one hand, the depositor and, on the other hand, the entrepreneur/borrower. [4] The aim is to “promote the concept of participation in a transaction supported by real assets, with risk funds being used on the basis of profit and loss sharing.” [2] However, there is another type of contract: a two-pronged (or intermediate) Mudaraba contract. In this case, the bank acts as an intermediary between the depositor and the bank`s customers to whom it makes money available.