Profits arising from the project are distributed according to a predetermined ratio. Any losses accruing are borne by the provider of capital. The provider of capital has no control over the management of the project. A form of partnership where one party provides the funds and the other party provides expertise.
- Provider of funds is called ‘Rabb-ul-Maal’ and the entrepreneur is called ‘Mudarib’
- Profit sharing ratio is determined at the time of entering into the Mudarabah agreement
- Loss is fully borne by the Rabb-ul-Mal
- For the deposit management, Aman Bank create different pools of investment keeping in view the risk and maturity profile of the depositors
- Types of Mudarabah financing
- Al-Mudarabah Al-Muqayyada: restricted Mudarabah
- Al-Mudarabah Al-Mutlaqah: unrestricted Mudarabah