Regulation on the parameterized of mudharabah contract: A critical analysis

• Main Authors: Che Arshad, Noraziah, Ismail, Abdul Ghafar
• Format: Article
• Language: English
• Published: IJER 2011
• Subjects: BP Islam. Bahaism. Theosophy, etc; HG Finance
• Online Access: http://repo.uum.edu.my/12589/1/ijer.pdf; http://repo.uum.edu.my/12589/; http://www.ijeronline.com/documents/volumes/Vol2issue3/ijer20110203(16).pdf
• Institution: Universiti Utara Malaysia

Mudharabah is cooperation between an investor who gives fund or capital to a party who will manage the fund or capital for trading. The profit will be shared between two parties, investor and the care taker.Bank Negara Malaysia (BNM), the central bank, has already published the draft of its latest Shariah parameter on Mudharabah contract.The rationale of this Shariah parameter is to provide reference on the nature and features of the mudharabah contract to Islamic financial services industry, who is to promote the harmonization of Islamic finance market practices.These are identified and proposed as secondary features mentioned in this parameter.This paper is focusing critically analyzes on practical constraint faced by Islamic banking in the implementation of Mudharabah financing facilities focus on under three categories: Demand Deposit, Mutual Investment Deposits and Special Investment Deposits.What do we expect from this paper may identify if a special rules apply to a types of contract mudharabah especially in restricted and unrestricted because their implication on conflict of interest.