How to Make Mudarabah More Applicable in Islamic Banking and Finance
1/9/2012 2:38:02 PM
Salman Ahmed Shaikh
One of the major impediments in the use of Mudarabah on the asset side of a bank i.e. for financing is that only Rabb-ul-Maal is considered to bear all the financial losses. Therefore, if an Islamic bank enters into the Mudarabah contract as a Rabb-ul-Maal, only the Islamic bank would have to bear all the losses. The problem is in the disparity in payoffs if loss occurs in Mudarabah.
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