Concept of Mudarbah in Islam (Islamic Banking)
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 ...