rofit-and-loss sharing or the risk-sharing techniques involved in partnerships. If the financier wants to finance the whole project, the form of Mudarabah can come into operation. If investment comes from both sides, the form of Musharakah can be adopted.Islamic bank arranges Musharakah on the basis of a written agreement with the client for a specific transaction or project for a fixed period of time that can be renewed. It could be used to finance industry, trade, real estate, contracting and almost all legal enterprises through partnership. A Musharakah business or its assets can also be securitised by selling Musharakah Certificates in the market. The Musharakah Certificate represents the ownership of the holder in a proportion of the assets of the project. It could be sold in the marker only if it represents non-liquid assets. If the certificate only represents a proportion of liquid assets of the project; it could not be sold in the market except, as it could be assimilated to a trade of money and thus would be similar to Riba.addition, the returns of the Islamic bank in Musharakah have been tied up with the actual profits accrued through the enterprise. Thus the client is required to provide the bank periodically with the results of operations of the business. The bank should also share the losses of the business. And if the enterprise earns enormous profits, all of it cannot be secured by the industrialist exclusively, but they will be shared by the common people as depositors in the bank. And since financial institutions do not normally want to remain partner of a specific project for good, they can sell their share to other partners of the project as aforesaid. is another agreement between the Islamic bank and an entrepreneur, whereby the entrepreneur can mobilize the funds of the bank for its business activity. It is considered as the basis of Islamic banking in the sense that funds are mobilized by banking and non-banking financial institutions mainly under this kind of partnership. The bank acts as a mudarib for the savers and investors and as financier for the entrepreneurs. If the bank employs the client s deposits without committing any of its own, it acts as mudarib for the client until the conclusion of the business transaction for which the funds were invested; whereas the entrepreneur provides his expertise , labor and management of the project. Profits made are shared between the bank and the entrepreneur according to predetermined ratio. In case of loss, the bank loses the capital, while the entrepreneur loses his provision of labor. It is this financial risk, according to the Shari ah, that justifies the bank's claim to part of the profit. The profit-sharing continues until the loan is repaid. The bank is compensated for the time value of its money in the form of a floating rate that is pegged to the debtor's profits. Its liability mudaraba...
