An Islamic bank has launched a product in order to finance various types of Shariah compliant business activities

Fatawa Question

An Islamic bank has launched a product in order to finance various types of Shariah compliant business activities. The product is based on a Mudarabah structure and operates as follows : -Along with the application form, the customer submits a Mudarabah feasibility study showing the bank’s anticipated profit share from the Mudarabah investment. -After completing necessary due diligence, the bank executes a Mudarabah agreement with the customer and provides the requested funds. -The agreement also incorporates a promise from the bank that in case the bank’s realized profit exceeds the anticipated profit stated in the feasibility study, the excess amount shall be granted by the bank to the customer as an incentive. In respect of the above product, the following query has been raised for the purpose of Shariah guidance. What action can be taken by the bank if: -The customer claims that the profit earned by the Mudarabah is equal to the anticipated profit, but refuses to disclose the actual profit ? -The customer claims that the profit is less than the anticipated profit, without sharing the actual results with the bank ?

Fatwa

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Publisher

Islamic Finance News

Publication Date

2014-12-03

Country of Publication

Malaysia

Main Subjects

Economics & Business Administration
Islamic Studies

Data Type

Fatawa

Language

English

Record ID

BIM-783163

• APA
• MLA
• AMA