4. Partnership Mode of Finance - Musharaka & Mudaraba | Islamic Finance 101

[@abdulrahmansalisu9742]

Jazakumullahu khaira from Nigeria

[@kaderferhat2495]

Partnership return can only be proportional to agreed upon percentage of actual realized profit, as for a fixed return amount or percentage on invested capital is Riba and therefore Haram

[@farukm7627]

Jazakallaah Khair brother Almir. You made this subject of Musharakha and Mudaraba very simple to understand. Thanks 👍

[@AlmirColan]

Waiyakum, I am glad it was easy to understand

[@ahmadazeem1507]

Mashallah, very good lecture, Jazakallah for your time and effort. May Allah grant you highest blessings.

[@nasreenakhtar8521]

It should be a proportion. Thats risk and profit sharing. The whole point of these instruments.

[@Maidabino]

Assalamu alaikum, jazakalah khair for the interesting presentation. As to the question, to guarantee a fixed amount of profit over a period is not permissible, because it is counter to the fundamentals of trade in islam, which is sharing profit and loss.

[@AlmirColan]

Yes, it goes against the principle of profit sharing, which should be based on the actual profit earned by the business, rather than being tied to the amount of capital contributed by each partner.

[@Maidabino]

@@AlmirColan my question is now, what is the principle of Sukuk please?

[@baay81]

thanks for sharing

[@ahmadjamous]

Question: For Mudaraba, the islamic bank offering a participation account gives back the capital owner the share of profit when there is profit, when asked what about loss, the bank (the operator of the contract here) said they they will bare all the loss. The bank gives condition that the only downside to the capital owner is if they cancel the contract) in this case the bank will return the capital as is. isn't this removing the risk off the transaction, which is a condition of Musharaka? is such a participation account permissible?

[@bogdanditu11]

I think it should be proportional

[@lokoomontana4818]

I don’t think it’s allowed to set a fixed amount but i don’t know the rule here. I did do it tho seems like a bad idea right now but what can I do

[@AlmirColan]

The principle is that profit sharing must be based on the actual profit earned by the business, not linked to the amount of capital contributed by each partner.

[@mrayangamingkhan]

@@AlmirColan In musharka both party do work? or 1?

[@farukm7627]

In answer to your question: not fixed but proportion of the profits.

[@johnny2121212]

I think it can be either fixed or variable in terms of monthly return. However after a year whatever business earnings were made they need to be calculated and if there is net loss then such amount be deducted from capital contribution. It gets a little more murky if the arrangement is such where one is sleeping partner but main capital investor whereas other person is active but with no capital investment. As agreement goes the sleeping partner is receiving fixed amount on monthly basis and if after a year it turns out business made a net loss then the question is how would the one who had zero capital investment would return the amount he received as profit…

[@AlmirColan]

The principle is that profit sharing must be based on the actual profit earned by the business, not linked to the amount of capital contributed by each partner.

[@johnny2121212]

@@AlmirColan This is a interesting thought as I always felt that profit sharing is based on capital investment share. Thanks for enlighten us all 🙏

[@PakuZero]

the fixed amount seems like it would fall under riba

[@AlmirColan]

yes

[@Fujrawi-y4t]

Business investment from person who works in bank: Salam Alaikum wa Rahmatullah wa barakatu, My question is, if a muslim friend who works in a conventional (non islamic) bank as a relationship manager, If he saved money from his salary and now wants to open a business with me, where he will invest in the business with his money and I will invest with my effort only and not money, is this money halaal for me since it is coming from the person who works in a bank?his income is from the bank and he doesn't have any other income maybe little bit from other investments which probably are from shares in other companies...The business we are trying to open is car workshop (garage). Jazak Allah khair

[@AlmirColan]

In general - as a minimum standard - you are not responsible for another person's source of income. Just like anyone who comes to buy from you, you don’t need to ask where they got their money or what their job is. The situation is similar here. However, if you want to make a point and uphold higher standards, you may choose, on principle, not to engage, especially if that engagement might be seen as problematic from some perspectives. That is a personal choice.

[@ayeshairam8282]

fixed amount falls under riba.