Answer to Question #152708 in Finance for sumaid

Question

Suppose a customer visits an Islamic Bank for opening investment account. This investment account is opened through Mudharabah contract.

Required:

i. Identify the nature (type) of contract.
ii. What are the roles (names) of Islamic Bank and customer in this contract?
iii. If the Islamic Bank decides that the customer (depositor) will be compensated with a 10% rate of return at the end of each month for the first year and then according to the KIBOR rate. Is this return allowed in Islamic Law?
iv. What are Islamic principles (Shariah rulings) regarding the profit and loss distribution in a Mudharabah contract?

Answer 1

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