ts like land, building, machinery, raw material etc. the Musharakah certificates will represent the holders 'proportionate ownership in these assets. However, in most cases, the assets of the project are a mixture of liquid and non-liquid assets. In such cases, most of Muslim jurists find it acceptable to trade in Musharakah Certificates, when the Musharakah portfolio comprises more than 50% in the form of non liquid assets., Mudarabah Certificates are investment instruments, which mobilize the Mudarabah capital by floating certificates, registered in the name of their owners; they represent shares of equal value. Joint owners of shares in the venture capital or whatever shapes it may take, in proportion to the each one s share therein. Mudarabah is considered as the basis of Islamic banking in the sense that funds are mobilised by financial institutions mainly under this arrangement by issuing negotiable Mudarabah certificates, representing ownership in the funds collected and providing for the profit earned from the investment of those funds to be distributed on Mudarabah principles. And as it is the case in Musharakah certificates; Mudarabah certificates will not be negotiable in the eye of Shari ah, if all the assets are in nature of liquid. In addition, Islamic banks could act 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. Finally, the liability of the Islamic bank under Mudarabah is limited to the amount of capital provided by the bank and the creditors of a Mudarabah have no recourse to other assets of the bank. [11]
Trade financing
Trade financing is also done in several ways. The main ones are: a) Mark-up where the bank buys an item for a client and the client agrees to repay the bank the price and an agreed profit later on. b) Leasing where the bank buys an item for a client and leases it to him for an agreed period and at the end of that period the lessee pays the balance on the price agreed at the beginning an becomes the owner of the item. c) Hire-purchase where the bank buys an item for the client and hires it to him for an agreed rent and period, and at the end of that period the client automatically becomes the owner of the item. d) Sell-and-buy-back where a client sells one of...
