Al Mudharabah (advance fiqh muamalat)
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Transcript of Al Mudharabah (advance fiqh muamalat)
Al Mudharabah(Profit Sharing Partnership)
Members :Nor Siti Atikah bt Abdul RazakNor Rukhila bt RosliNurul Ashikin bt Mohammad SohaimiSiti Nabilah bt HashimUmmu Shahirah bt Mohd Azhar
Definition• Literally:
• Derived from the phrase “dharaba fi al-ard” which means to make a journey and it is called this because the agent (entrepreneur) gets profit by virtue of his hard work and efforts in performing long journeys.
• Technically:
• A contract or a partnership where one provides the capital and the other the entrepreneurship with the profit being shared among them with a predetermined condition
• Partnership in profit whereby one party (rabb al-mal) provides capital and the other party (mudharib) provides labor.
Characteristic of Mudharabah
Legal EvidenceAl Quran :
i. “… and others who travel in the land seeking of the bounty of Allah” ( Al-Quran, Al- Muzammil : 20)
ii. “… but when the prayer is ended, they disperse abroad in the land and seek Allah’s grace “ (Al-Quran, Al-Jumu’ah : 10)
iii. “… there is no blame on you in seeking bounty from your Lord.. “ ( Al-Quran, Al-Baqarah : 198)
• Although this verses do not directly address the legality of mudharabah, they have been interpreted to include those who travel for the purpose of trading and seeking permissible income.
•Although this verses do not directly address the legality of mudharabah, they have been interpreted to include those who travel for the purpose of trading and seeking permissible income.
Legal EvidenceHadith:
• Reported By Hakim Bin Hizam that he had stipulated to a man that if he gave him certain asset to be utilized for Muqaradah (Mudharabah, Qiradh) , he must not use it to purchase livestock, or carries it (travel) through the sea, or drop by at the oasis, if the man committed any of the above, he is considered to be the guarantor of my property
Pillars of MudharabahPillars of Mudharabah
Conditions of MudharabahConditions of Mudharabah
1.1. Conditions of SighahConditions of Sighah
• It is constitute of offer and acceptance.
• For example, A who has money says to B, “Take this money as mudharabah, and what God gives in profit will be divided between us…” (And he specifies a certain profit sharing ratio).
• Can be done verbally, in writing or through any means of communication that is acceptable by both contracting parties.
2.2. Conditions of Contracting Conditions of Contracting PartiesParties
• Involve
i. capital provider (rabbul mal)
ii. the entrepreneur (mudharib)
• Must be qualified persons under the law to enter the contract of mudharabah.
• Eg: sound mind.
3.3. Conditions related to Subject Conditions related to Subject MatterMatter
a)a) Conditions of WorkConditions of Work
• The work or business venture under Mudharabah must be conducted solely by the entrepreneur (mudharib). It is not legal if the capital provider (rabbul mal) was also required to conduct the daily operation.
• The project must be legal and permissible (halal).
• All the expenses will be taken from the capital provided that is not more than the justified expenses required in the venture.
b)b) Conditions of CapitalConditions of Capital
1. Must be in the form of money and not commodities since commodities fluctuate in price and cause uncertainty and ignorance.
2. The capital must be clearly specified, determined and known at the time of the contract.
3. Must be available cash-present during the conclusion of contract.
4. Must be delivered to the possession of the mudharib entirely.
c)c) Conditions of ProfitConditions of Profit
1. The distribution of profit must be determined proportionally between the capital provider and the entrepreneur.
2. The pre-determined profit must be in ratio form or percentage and not in fixed amount.
3. Allowed to be different ratios at different situations.
Al Mudharabah Al – Mutlaqah
vsAl Mudharabah Al - Muqayyadah
Al Mudharabah Al - Mutlaqah Al Mudharabah Al - Muqayyadah
Al Mudharabah Al-Mutlaqah is
unrestricted Mudharabah which is the
capital provider (rabbul mal)
authorizes the entrepreneur
(mudharib) to act completely at the
latter’s option in all business matter.
Al Mudharabah Al-Muqayyadah is restricted
Mudharabah which is the capital provider
makes certain limitations to the activities to
be conducted by the mudharib with regards
to the capital given.
Rabbul mal only invests money as
capital to the mudharib for the
business, mudharib utilise the capital
without involvement of rabbul mal.
Rabbul mal invests money as capital to the
mudharib for the business and also has
authority to make conditions or restrictions
related to investment and business
operations.
Example :
Kuwait Finance House (KFH)
Mudharabah Current Account-i
Example :
Bank Islam Ziyad NDI-i – the form of Islamic
Negotiable Instrument (INI)
Mudharabahvs
Musharakah
Mudharabah Musharakah
The capital is financed by one party, which is the capital provider or the owner of the business
The capital is financed by all the shareholders according to the proportion agreed upon by all parties
The capital must be in the form of cash money
Any type of property that could normally be assessed and have certain commercial value could be considered as an acceptable source of capital. Example; intellectual capital
The entrepreneur will be the only one that will conduct the actual business. The capital provider is not allowed to jointly work with the entrepreneur.
All the shareholders have the right to work and contribute their skills, knowledge, experience e and expertise in the company
The monetary loss will be solely borne by the capital provider while the entrepreneur will only suffer from a fruitless effort without having to bear all the capital losses
The monetary loss will be jointly borne by all the shareholders according to the ratio and proportion of their respective share in the partnership
Termination of Mudharabah
ISSUES ON MUDHARABAH
Subtitle
RISKINESS
1 Rabbul maal provide capital. 1. mudarib act as entrepreneur.
2. Bear any loss incurred. 2. Bear no loss.
* violation towards small depositors and investors.
Rabbul
maalM
udari
b
STIFF COMPETITION
1 non- interest bearing 1 interest bearing.2.revenue is not guaranteed. 2.revenue is guaranteed.
3.less profit but halal 3.high profit but doubtful.
* Customers prefer conventional due to high returns.
Mudharabah
Conventional
LONGER FINANCING PERIOD
1 long-term financing. 1.short-term financing.
2. late return. 2. quick return.
* Customers prefer Ijarah & murabahah due to quick return.
Mudharabah
Ijarah & Murabahah
NOT TECHNICALLY ACHIEVABLE
1.Rabbul maal provide capital. 1. mudarib act as entrepreneur.
2.Bear any loss incurred. 2. Bear no loss.
* Expertise is required to monitor long-term project so that it runs smoothly.
Rabbul
maalM
udari
b
Expertise
MUDHARABAH INVESTMENT ACCOUNT
SPECIAL INVESTMENT ACCOUNT (SIA)
1. Not open to public
2. PSR commonly negotiated.
3. Occur between bank and government link companies
(GLC).
DIFFERENCES BETWEEN GIA & SIA
GENERAL INVESTMENT ACCOUNT (GIA)
1. Open to public.
2. PSR decided by the bank.
3. Could be between bank and entrepreneur or customer and
provider of capital.
MUDHARABAH SAVINGS ACCOUNT
MUDHARABAH CURRENT ACCOUNT
Conclusioni. There are many products in practice under mudharabah
concept.( project financing, investment account, etc )
ii. To avoid public to make illegal activities for generate more money.
iii. Possible to take care of society and social justice
“He who sleeps on a full stomach whilst his neighbour goes hungry is not one of us” (Saying of Prophet Muhammad PBUH)