Assignment: Ibf: Name: Areeba Zaidi Roll No: 17525 Campus: Gulshan

ASSIGNMENT: IBF
NAME: AREEBA ZAIDI

ROLL NO: 17525
CAMPUS: GULSHAN
Q: Suppose a customer visits an Islamic Bank for opening investment
account. This investment account is opened through Mudharabah contract.
Required:
i. Identify the nature (type) of contract.
ANSWER:
Mudharabah contract is the one in which one partner is the investor

(i.e., rabb-ul-maal) who invests capital in any form, cash form or in
the form of goods and the other partner is the one who manages the
business with the help of the capital invested by the rabb-ul-maal, the
partner who manages the business is called mudharib. The nature of
this contract is the unrestricted mudharabah as in this contract the
rabb-ul-maal (costumer) did not put any kind of restrictions on the
mudharib (bank) for the business. In this contract the mudharib (bank)
has full freedom o use the investment of rabb-ul-maal in any kind of
business or at any place without any restrictions from the side of
investor that’s why this type of contract would be called as
unrestricted mudharabah.
ii. What are the roles (names) of Islamic Bank and customer in this
contract?
ANSWER:
In this contract customer is rabb-ul-maal as he is the one investing

capital in the business, he is the owner of the capital as he is providing
cash or goods to run a business. Islamic bank is the mudharib in this
contact as the investments of rabb-ul-maal are being deposited in the
bank, bank is taking the capital from the customer (rabb-ul-maal) to
use that capital in managing the business.
The role of customer is that he just provides the capital, it’s up to

rabb-ul-maal to provide capital in cash form or in goods form and
allow the bank to use that capital for managing the business, rabb-ul-
maal has full right to keep check and balance on the activities of
mudharib. The role of mudharib (bank) is to manage the business and
to invest the capital of rabb-ul-maal (customer) in the business and
manage all the activities and make profit. The profit got from the
business would be distributed between both and if any loss occurs in
the business so customer would be responsible for the loss unless the
loss is not occurred due to any mistake of the bank.
iii. If the Islamic Bank decides that the customer (depositor) will be
compensated with a 10% rate of return at the end of each month for
the first year and then according to the KIBOR rate. Is this return
allowed in Islamic Law?
ANSWER:
No, this rate of return is not allowed in Islamic law as it is not allowed
to distribute the profit only when the profit is gained in the business,
before making the profit its distribution is not allowed and that
distribution also should be according to the ratio that has been decided
before starting the contract.
iv. What are Islamic principles (Shariah rulings) regarding the profit and
loss distribution in a Mudharabah contract?
ANSWER:
Islamic principles regarding the profit and loss distribution in

Mudharabah contract are as follows:
 Before doing Mudharabah contract both rabb-ul-maal and

mudharib should decide the ratio of the profit that has to be
distributes between both of them. The ratio that is set to be
distributed must be agreed by both the parties.
 When the business is started and profit is made than the profit must
be distributed according to the ratio that has set before starting the
business while doing the contract. But if, the ratio of the profit is
not decided before starting the business and profit is gained
without both the parties being agreed on any definite ratio than in
this case according to Islamic principles the profit must be divided
in both the parties with 50-50% sharing.
 Ratio of sharing the profit is not restricted in Islamic principles, it’s

up to both the parties to decide any ratio but it is must that both are
agreed on the decided ratio. Some excessive amount of profit can
be given to mudharib by rabb-ul-maal by his own will in the form
of any reward or bonus.
 Mudharib cannot claim any excessive amount else than the profit
decided to get. It is not allowed in the Islamic principles for the
mudharib to ask for extra amount of money as his fees or salary,
the profit he is getting is the fees of his work.

Assignment: Ibf: Name: Areeba Zaidi Roll No: 17525 Campus: Gulshan

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Assignment: Ibf: Name: Areeba Zaidi Roll No: 17525 Campus: Gulshan

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ASSIGNMENT: IBF

NAME: AREEBA ZAIDI

i. Identify the nature (type) of contract.

Mudharabah contract is the one in which one partner is the investor

In this contract customer is rabb-ul-maal as he is the one investing

The role of customer is that he just provides the capital, it’s up to

Islamic principles regarding the profit and loss distribution in

 Before doing Mudharabah contract both rabb-ul-maal and

 Ratio of sharing the profit is not restricted in Islamic principles, it’s

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