Mateen Altaf

Musharakah meaning partnership, is an Islamic mode of finance in which capital is provided by two or more parties for project development. Banks can provide financing to a project with equity rather than a fixed-interest loan, which most pious Muslim consider haram (forbidden). The profits of the project are shared among the investing parties on the basis of their participation or on a pre-agreed ratio and the losses are shared on the basis of equity participation. The difference between Musharakah and mudarbah is that in Musharakah, all involved parties provide capital to share in the profit or loss of the project. In mudarbah, one party provides the capital and the other acts as an agent to invest it. The agent in a mudarbah does not share in the losses. Equity finance is considered the backbone of Islamic banking. Yet, in the last two decades, debt finance, i.e., short-term Murabaha, has been the most popular mode of financing for Islamic banks. With the growing demand for lon...

Mudarbah is a special kind of partnership where one partner gives money to another for investing it in a commercial enterprise. The investment comes from the first partner who is called “rabb-ul-mal”, while the management and work is an exclusive responsibility of the other, who is called “mudarib”. The difference between Musharaka and mudarbah can be summarized in the following points: The investment in Musharaka comes from all the partners, while in mudarbah, investment is the sole responsibility of rabb-ul-mal. In Musharaka, all the partners can participate in the management of the business and can work for it, while in mudarbah, the rabb-ul-mal has no right to participate in the management which is carried out by the mudarib only. In Musharaka all the partners share the loss to the extent of the ratio of their investment while in mudarbah the loss, if any, is suffered by the rabb-ul-mal only, because the mudarib does not invest anything. His loss is restricted to the fact ...

Riba can be roughly translated as "Usury", or unjust, exploitative gains made in trade or business. Riba is mentioned and condemned in several different verses in the Qur'an (3:130,4:161, 30:39 and perhaps most commonly in 2:275-280). It is also mentioned in many Hadith. Though it is believed that only the religion Islam has prohibited or discouraged it, but it is also prohibited or hardly discouraged through the Old Testament [1] (i.e., set of holy books granted to follow in Judaism and Christianity) which is cited here, “And in case your brother grows poor so he is financially weak alongside you, you must also sustain him. As an alien resident and a settler, he must keep alive with you. Do not take interest and usury from him, but you must be in fear of your God; and your brother must keep alive with you. You must not give your money on interest, and you must not give your food out on usury.”(Leviticus 25:35-37) While Muslims agree that Riba is prohibited, there is ...

Risk is potential of losing something of value. Values (such as physical health, social status, emotional well being or financial wealth) can be gained or lost when taking risk resulting from a given action, activity and/or inaction, foreseen or unforeseen. Risk can also be defined as the intentional interaction with uncertainty. Uncertainty is a potential, unpredictable, un-measurable and uncontrollable outcome, risk is a consequence of action taken in spite of uncertainty. Risk perception is the subjective judgment people make about the severity and/or probability of a risk, and may vary person to person. Any human endeavor carries some risk, but some are much riskier than others. International Organization for Standardization The ISO 31000 (2009) / ISO Guide 73:2002 definition of risk is the 'effect of uncertainty on objectives'. In this definition, uncertainties include events (which may or may not happen) and uncertainties caused by ambiguity or a lack of information...