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Is Mudaraba’A Lawful?

Author

Listed:
  • Farooq Aziz

    (Department of Business Administration, Federal Urdu University)

  • Noor Muhammad Jamali

    (Institute of Commerce, University of Sindh)

Abstract

Mudarabaa is a special type of partnership in Islamic Sharia, between at least two partners for any trading purpose.Out of them one is financer, and the other in worker.The role of financer is as a sleeping partner, and worker runs the business by using his labour and expertise.By keeping the same division number of partners may be increased.Profit is divided among the partners in a predecided ratio, but the entire loss should be faced by financer only.This type of Partnership is common in business and have significant importance in socalled Islamic banking or interest free banking.Whereas the question of its legality is concerned, there is a consensus about it, and different arguments are given from Quran and Hadith for its validity.But unfortunately nonof them have any logical or intellectual base.Any solid proof from Quran & Hadith is not available in this regard.The events which are presented in this context from the life of holy prophet Muhammad & Sahabaekaram do not have any concern with fikhi term mudarabaa.The same situation is with other reasons which are given in this regard.On the other hand this act has a deep resemblance with riba interest.Since no evidence can be provided to prove its validity, hence mudarabaa is completely unlawful from Islamic point of view.

Suggested Citation

  • Farooq Aziz & Noor Muhammad Jamali, 2008. "Is Mudaraba’A Lawful?," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 4(2), pages 82-88.
    • Handle: RePEc:aib:ibtjbs:v:4:y:2008:i:2:p:82-88
    DOI: https://doi.org/10.46745/ilma.ibtjbs.2008.42.2
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    Keywords

    Mudaraba'a; Qur'an; Hadith; Verse;
    All these keywords.

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