Mudarbah

The term refers to a form of business contract in which one party brings capital and the other manages the business through inputting personal effort. The proportionate share in profit is determined by mutual agreement, but the loss is borne only by the owner of the capital, in which case the entrepreneur gets nothing for his labor. The financier is known as "Rab-al-Maal" and the entrepreneur as "Mudarib". Mudarabah is generally offered by banks for customer investments in Saving Accounts, Regular or Monthly Savings, Term Deposits where customers invest their funds by opening an Account as "Rab-al-Maal" and Bank accepts customer investments as Mudarib. The profit is shared in pre-agreed ratios, and loss, if any, unless caused by negligence or violation of terms of the contract by the "Mudarib" is borne by the Customer.