Mudaraba`s two-step method is less used than the first-level method. This is because banks generally have liquidity and/or know-how to enter into a first division contract and that the two-class method is not as profitable for the bank as the First Tier method. The bank alone does not have the ability to serve as an investor (rab al evil). This scenario may mean that the bank does not have sufficient liquidity to enter into a Mudaraba contract with a contractor or fund manager. Let us take the example of a two-speed Mudaraba treaty in action. Two contracts to be executed: c) The management of the institution with respect to the project is in no way considered to be an infringement of the client`s responsibility to the institution, with respect to other entities granted under another agreement between the client and the institution, whether or not the proceeds of these funds were used in the project. All mudaraba contracts are limited to a fixed period; they don`t go indefinitely. Over time, I will reduce the other models of Islamic agreements mudaraba (mudaraba al muqayyadah): the investor gives a particular company or project where investment funds must be used; The work partner should not use the funds for other operations or projects. The Mudaraba contract is applied when someone pays money into an Islamic bank in the hope of obtaining a return. In most cases, the contract applied is a single -stage (or simple) Mudaraba contract, i.e. only the customer and the bank are involved. (The bank acts as a fund manager for every money that is deposited.) Here is an image of how the Mudaraba Treaty works as a financial instrument. DISCLAIMER: This standard contract is provided only as an example.
It should not be duplicated without taking into account a given situation. Legal advice from a qualified Islamic finance researcher and a registered lawyer for the relevant jurisdiction is always required. The laws vary by jurisdiction and some provisions of this model contract may not be applicable. This standard contract is only used to illustrate and its user frees the sender from any fault. I made these following samples from the site Ethica.Com (my favorite site so far). These are good samples that have been drawn mainly from the Middle East perspective. Those published on their website are: A rabbi can choose to invest in two types of Mudaraba contracts: Mudaraba contracts, rab al evil and gains and losses of Mudarib shares, based on an agreed report.