Who contributes capital in a mudaraba contract?

Who contributes capital in a mudaraba contract?

• A. Mudarib
• B. Rab al mal
• C. Musharik
• D. Ijarah

Answer: (B)

In a mudaraba contract, the capital is contributed by the rab al mal, which refers to the investor or party providing the financial resources. The rab al mal invests capital into a business venture while the mudarib, who is the entrepreneur or manager, manages the actual operation of the business. This type of partnership is based on trust and profit-sharing, where the rab al mal enjoys the financial benefits without participating in the management of the business. The risks taken in the venture are primarily borne by the rab al mal since they are the ones providing the capital. On the other hand, the mudarib has the responsibility of running the business efficiently but does not contribute any capital. Understanding these roles is crucial, as it highlights the distinction between contribution and management in Islamic finance, emphasizing the principle of risk-sharing and the separation of ownership and control.

In a mudaraba contract, the capital is contributed by the rab al mal, which refers to the investor or party providing the financial resources. The rab al mal invests capital into a business venture while the mudarib, who is the entrepreneur or manager, manages the actual operation of the business.

This type of partnership is based on trust and profit-sharing, where the rab al mal enjoys the financial benefits without participating in the management of the business. The risks taken in the venture are primarily borne by the rab al mal since they are the ones providing the capital. On the other hand, the mudarib has the responsibility of running the business efficiently but does not contribute any capital.

Understanding these roles is crucial, as it highlights the distinction between contribution and management in Islamic finance, emphasizing the principle of risk-sharing and the separation of ownership and control.