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Modarba

Modarba is a mode of Islamic finance involving a partnership where one party provides funds (rab ul maal) and the other offers managerial skills (mudarib). Profit is shared based on a predetermined ratio, and agreements must define the purpose and profit distribution. There are two types of Modarba: unrestricted, allowing the mudarib full freedom in business decisions, and restricted, where the rab ul maal specifies the business type or location.

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28 views1 page

Modarba

Modarba is a mode of Islamic finance involving a partnership where one party provides funds (rab ul maal) and the other offers managerial skills (mudarib). Profit is shared based on a predetermined ratio, and agreements must define the purpose and profit distribution. There are two types of Modarba: unrestricted, allowing the mudarib full freedom in business decisions, and restricted, where the rab ul maal specifies the business type or location.

Uploaded by

Kashif Mirza
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as TXT, PDF, TXT or read online on Scribd
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Modarba

Modarba is a one of the modes of Islamic finance. It is a special kind of


partnership in which one partner provides the
funds to the another person provides the labour. The person who provides the
investment or the funds is called
"rab ul maal" and the person who undertakes to manage and supervise the business
physcially is called "mudarib".
The "mudarib" is generally a person who is skillfull and knows how to manage the
business. In Modarba, the profit is
distributed between the partners in a perdetermined ratio.

Essentials of Modarba

Following are the essentials of Modarba.

1) In Modarba agreemenent, one party undertakes to provide managerial skills and


the other party provides funds to carry
out the business.
2) In Modarba agreements, there must a clause determining the agreed ratio of the
distribution of profit between the partners
3) Modarba agreeements must clearly define the purpose of the Modarba agreement. It
can be made for "multiple purposes"
or for a "special purpose"
4) In Pakistan, the Modarba businesses are being governed by "Modarba Companies
Ordinance 1980" and "Modarba Rules 1981"

Kinds of Modarba

Unrestricted Modarba

In unrestricted Modarba, rab ul maal(the person who provides the funds) gives full
freedom to mudarib(the one who provides
the managerial skills) to undertake whatever business he deems fit or has skills to
run. However the Mudarib, shall not
be authorized to

.) Invite another Mudarib or partner without the consent of the rab ul maal
.) Mix his own invesment in that particular Mudarba asset without the consent of
Rab ul maal

Restricted Modarba

In Restricted Modarba business, the rab ul maal specify a particular business or a


particular
place for a business, in which is he willing to investment.In this case, the
Mudarib, is bound
by the rab ul maal, to carry out that particular type of a business.

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