Mudsasi

Mudharabah

Background

Mudharabah contract is a profit sharing contract amidst the entrepreneur and the capital provider. Mudharabah contract is applied in fixate taking arrangement such as current account, savings account and investment account. The contract is also applied in inter-bank investment and Muslim bonds. In takaful industry, mudharabah contract is used as one of the ope rational model as well as being applied for investing the takaful funds.

Issues

1. Floating Islamic transferrable Instrument of Deposit (INID) Bank Negara Malaysia has introduced floating INID with the following mechanisms:

i. A guest binds money into a bank;
ii. The bank accepts customers deposit and issues INID to the customer as an evidence of receiving deposit;
iii. INID is tradable in the secondary market;
iv. On maturity, the customer or holder of INID returns it to the bank and receives the principal value of INID and the declare dividend; and
v. The declared dividend is from the profit derived from the investment of the deposit.

The term floating refers to the characteristic of the product that changes in value based on the dividend declared by the bank from time to time. The question is whether the investment mechanism mentioned to a higher place is in line with mudharabah principle.




Resolution
The Council in its 3rd meeting held on 28th October 1997 / 26th Jamadil Akhir 1418 resolved that Floating Islamic transportable Instrument of Deposit (INID) using mudharabah concept is permissible and tradable in the secondary market.

2. Mudharabah Current Account
There was a proposal from Islamic banking institution to introduce mudharabah current account product. This account is antithetical from the wadiah current account in which the payment of dividend to customers is at the resole discretion of the bank.

In this mudharabah current account, customers have right to administer any profits generated in proportion to a pre-agreed ratio by both parties at the point of...



If you want to invite a full essay, order it on our website: Orderessay



If you want to get a full essay, wisit our page: write my essay .