What is Mudharaba?
A partnership of those people who have funds and those who have skills like scientific, managerial, technical or professional skills.
Principles are similar manner to hedge funds managers and investors.
Mudarabah financing is a kind of partnership where one partner contributes money (i.e. the financier) to another (entrepreneur, who contributes his expertise, skill, knowledge, labour, idea), for investing in a commercial enterprise. The investment comes from the first partner who is called “Rab-ul-Maal” while the management and work is an exclusive responsibility of the other, who is called “Mudarib” and the profits generated are shared in a predetermined ratio.
Modern day uses
Investment and savings accounts in Islamic Sharia Compliant banks are structured based on Mudharaba principles. The bank management provides management skills and the depositors the funds.
Islamic Sharia Compliant Venture capital funds can be structured based on Mudharaba principles. In this case the Venture capital fund is the provider of capital and the Venture promoter’s are the providers of Skills.
In property development 🙌 finance the Islamic Bridge Finance or development finance provider, provides the capital and the property developer or investor the skills to manage the property development or investment.
Contact Everest Financial Services for Islamic Sharia Compliant Bridge Finance and property development and investment solutions.