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Question # : 29928


Assalaam o Alaikum,
In, Muddarbah under Islamic banking, one party provides investment while the other gives technical expertise and management. Profit if any, is divided between both the parties on prefixed basis while loss, if any, is only borne by the investor. Is it not exploitation of the investor and does Islam allow this?

Answer : 29928

Published on: Feb 10, 2011

بسم الله الرحمن الرحيم

(Fatwa: 267/L/77/tl=1432)

The ruling of mudharibah is that one person invests and the second one does labour and the profit is distributed as per the contract basis. In case of loss, first it is compensated from profit, then from capital amount. If the mudharibah is carried out accordingly, it is lawful according to shariah and there is no exploitation of the investor.

Allah knows Best!

Darul Ifta,
Darul Uloom Deoband

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