What Is Mudaraba in Islamic Finance and Banking?

Types of Mudaraba: There are two types of Mudaraba, and they are mentioned below:

(1). Al Mudaraba Al-Muqayadah:

Rab’ul-Maal may specify a particular business or a particular place for the Mudaarib, in which case he will invest the money in that particular business or place. This is called Al Mudaraba Al-Muqayadah (restricted Mudaraba).

(2). Al Mudaraba Al Mutlaqah:

However if Rab’ul-Maal gives full freedom to Mudaarib to undertake whatever business he deems fit, this is called Al Mudaraba Al Mutlaqah (unrestricted Mudaraba). However Mudaarib cannot, without the consent of Rab’ul-Maal, lend money to anyone. Mudaarib is authorized to do anything, which is normally done in the course of business. However if they want to have an extraordinary work, which is beyond the normal routine of the traders, he cannot do so without express permission from Rab’ul-Maal. He is also not authorized to:

a) keep another Mudaarib or a partner

b) mix his own investment in that particular Modarabah without the consent of Rab-ul Maal.

Conditions of Offer & Acceptance are applicable to both. A Rab’ul-Maal can contract Mudaraba with more than one person through a single transaction. It means that he can offer his money to ‘A’ and ‘B’ both so that each one of them can act for him as Mudaarib and the capital of the Mudaraba shall be utilized by both of them jointly, and the share of the Mudaarib.

Difference between Musharaka and Mudaraba

(1). In Musharaka, all partners invest, however in Mudaraba Finance, only Rab’ul-Maal invests.

(2). In Musharaka, all partners participate in the management of the business and can work for it. However, in Mudaraba, Rab’ul-Maal has no right to participate in the management which is carried out by the Mudaarib only.

(3). In Musharakha, all partners share the loss to the extent of the ratio of their investment. But in Mudaraba, only Rab’ul-Maal suffers loss because the Mudaarib does not invest anything. However this is subject to a condition that the Mudaarib has worked with due diligence.

(4). In Musharaka, the liability of the partners is normally unlimited. If the liabilities of business exceed its assets and the business goes in liquidation, all the exceeding liabilities shall be borne pro rata by all partners. But if the partners agree that no partner shall incur any debt during the course of business, then the exceeding liabilities shall be borne by that partner alone who has incurred a debt on the business in violation of the aforesaid condition. However in Mudaraba, the liability of Rab’ul-Maal is limited to his investment unless he has permitted the Mudaarib to incur debts on his behalf.

(5). Once the partners mix up their capital in a joint-pool in Musharaka, all the assets become jointly owned by all the partners, according to the proportion of their respective investment. All partners benefit from the appreciation in the value of the assets even if profit has not accrued through sales. In Mudaraba financing, the goods purchased by the Mudaarib are solely owned by Rab’ul-Maal and the Mudaarib can earn his share in the profit only in case he sells the goods profitably.

Distribution of Profit & Loss

It is necessary for the validity of Mudaraba that the parties agree, right at the beginning, on a definite proportion of the actual profit to which each one of them is entitled. The Shariah has prescribed no particular proportion; rather it has been left to their mutual consent. They can share the profit in equal proportions and they can also allocate different proportions for Rab’ul-Maal and Mudaarib. However in extreme case where the parties have not predetermined the ratio of profit, the profit will be calculated at 50:50.

The Mudaarib & Rab’ul-Maal cannot allocate a lump sum amount of profit for any party nor can they determine the share of any party at a specific rate tied up with the capital. For example, if the capital is 10,000 Pound Sterlings, they cannot agree on a condition that 1,000 Pound Sterlings out of the profit shall be the share of the Mudaarib nor can they say that 20% of the capital shall be given to Rab’ul-Maal. However they can agree that 40% of the actual profit shall go to the Mudaarib and 60% to the Rab’ul-Maal or vice versa.

It is also allowed that different proportions are agreed in different situations. For example, the Rab’ul-Maal can say to Mudaarib “If you trade in wheat, you will get 50% of the profit and if you trade in flour, you will have 33% of the profit”. Similarly, he can say “If you do the business in your town, you will be entitled to 30% of the profit and if you do it in another town, your share will be 50% of the profit”.

Apart from the agreed proportion of the profit, as determined in the above manner, the Mudaarib cannot claim any periodical salary or a fee or remuneration for the work done by him for the Mudaraba. All schools of Islamic Fiqh are unanimous on this point. However, Imam Ahmad has allowed for the Mudaarib to draw his daily expenses of food only from the Mudaraba Account. The Hanafi jurists restrict this right of the Mudaarib only to a situation when he is on a business trip outside his own city. In this case he can claim his personal expenses, accommodation, food, etc. but he is not entitled to get anything as daily allowances when he is in his own city.

If the business has incurred loss in some transactions and has gained profit in some others, the profit shall be used to offset the loss at the first instance, then the remainder, if any, shall be distributed between the parties according to the agreed ratio.

The Mudaraba becomes void (Fasid) if the profit is fixed in any way. In this case, the entire amount (Profit + Capital) will be the Rab’ul-Maal’s. The Mudaarib will just be an employee earning Ujrat-e-Misl. The remaining amount will be called (Profit). This profit will be shared in the agreed (pre-agreed) ratio.

Uses Of Musharaka/Mudaraba:

These modes can be used in the following areas (or can replace them according to Shariah rules).

Asset Side Financing

- Any term financing
- Project financing
- Small and medium enterprises setup financing
- Large enterprise financing
- Import financing
- Import bills drawn under import L/C
- Inland bills drawn under inland L/C
- Bridge financing
- LC without margin (for Mudarba)
- LC with margin (for Musharaka)
- Export financing (Pre-shipment financing)
- Working capital financing
- Running accounts financing/short term advances

Liability Side Financing

- For current/saving/monthly-profit/investment accounts (deposit giving Profit based on Musharkah / Mudaraba – with predetermined ratio)
- Inter-Bank lending/borrowing
- Term Finance Certificates & Certificate of Investment
- T-Bill and Federal Investment Bonds/Debenture
- Securitization for large projects (based on Musharkah)
- Certificate of Investment based on Murabahah
- Islamic Musharaka bonds (based on projects requiring large amounts – profit based on the return from the project)

A 100% Online interactive lecture on Mudarabah Financing and many other Islamic Financial Instruments could be seen under FREE Islamic Finance Lectures at AIMS – Islamic Finance Institutes’ website.

Posted in Uncategorized | Comments Off

How to Start a Career in Finance

If you are interested in starting a career in finance, it would be good to plan ahead. There are several things that you will need to take note of in order to prepare yourself well for this field.

The basic requirement needed would be the right education. The minimum level of education to get into an entry-level position would be the bachelor’s degree. The online finance degree is becoming increasingly popular as it allows people to complete the degree while gaining working experience. Nevertheless, an online degree of this level will focus on technology, e-business, ethics, critical thinking, research methods, and statistical analysis. If one is interested in breaking into management level positions, they would need to have either a master’s degree or an MBA.

With a master’s degree, people often complete it while working full-time. At the same time, they would be able to attain certifications like the CPA, CMA, or CFA. As one will need to balance between work and study, people often go for an online finance degree of this level for its flexibility. On the other hand, an MBA program with a specialization in finance is always keeping its syllabus up-to-date with the current market. A PhD puts more focus on the theoretical concepts within the field, such as leadership and organizational chance, knowledge and learning management, and high-level decision-making.

In finance, certification is very much recommended to show one’s area of expertise. For one to pursue the Chartered Financial Analyst (CFA) certification, one will need to meet the requirements of having a bachelor’s degree and at least three years of professional experience in a relevant field. Then, they will need to pass the three exams that will be taken within the course of three years. On the other hand, personal financial advisors can go for their Certified Financial Planner (CFP) certification which will require them to pass a set of exams and a strict code of ethics, other than providing their academic credits. As for financial managers, a Certified Cash Manager (CCM) requires them to pass online exams and have at least two years of professional experience. The progress of certification for managers in a financial institution industry begins with Credit Business Associate (CBA), followed by Credit Business Fellow (CBF), and then Certified Credit Executive (CCE).

Attaining the right education and certification will guarantee you a successful future, in addition to hard work and determination.

Chris is the writer of this article and he likes to write articles on interesting topics such as Online Finance Degree and Finance Salary. Visit for more details.

Posted in Uncategorized | Comments Off

Choices in Finance Education

The finance industry offers a plethora of options to students wanting to join the finance profession.

Today’s finance profession is not limited to just the accounting jobs. With the right kind of finance education, a finance student can find himself suitable for a variety of finance roles. Most finance careers require you to be good with numbers and have knowledge of basic business statistics. Let’s take a look at some of the lucrative financial education options.

Accountancy: This is the most widely popular financial career. Commonly referred to as a public accountant, you learn about to prepare and maintain a businesses financial records. You also learn about taxation and other financial aspects of the business. Education in this area is very comprehensive, and the exam is considered quite difficult. Apart from public accountants, there are also other specialized fields such as cost accountant, management accountant, and tax expert.

MBA Finance: Another popular area in finance education is the MBA in Finance. This program is at the post-graduate level and is offered by most universities as well as business schools. An MBA Finance degree opens up career opportunities in a plenty of areas, which include banking, financial analysis, financial markets, research, etc. In general, the reputation of an MBA Finance is measured based on his skill level and the reputation of the college from where the program was completed.

Financial Planning: This is one of the most sought after professions in the finance field. As a financial planner, you are required to manage the personal finances of individuals. You are expected to invest people’s money in the best assets based on their risk profile and also advice them on various matters such as taxation, real estate, among others.

Finance Certifications: As the finance profession has grown, many new finance certifications have emerged that help students get equipped with very specific financial knowledge. For example, the Certified Financial Analyst (CFA) designation helps you become a financial analyst. There are popular certification programs for becoming risk managers; these are Financial Risk Manager (FRM) offered by GARP, and Professional Risk Manager (PRM) offered by PRMIA. If you are interested in Alternative investments, then you have the option to become a Certified Alternative Investments Analyst (CAIA). There are financial certifications in almost every area of finance.

You can choose to pursue your finance education either as self-study (through certifications) or by joining a college. In either case, you will gain practical experience once you join the industry.

Sam is an expert in finance with over 10 years of experience in finance education industry. He currently writes for Finance Train on various topics in Finance Education.

Posted in Uncategorized | Comments Off

Online Finance Education – More Than Just a Finance Certificate

It is no doubt that knowledge and skills is what today’s world need the most. The economic recession has just exposed how ill equipped most of us are in managing their finances. This ill equipment ranges from personal finances to business finances. It no wonder that many people especially in America have been caught pants down with lives that were just but borrowed. How else would you call the huge credit card bills that are taking down gigantic economies such as the USA and Europe?

Finance education has to be redefined from the traditional finance for picking mistakes in accounting to a contemporary finance education that allows you to be have skills to better manage personal finances or business finances.

The revolution brought about by the information technology (IT) is an opportunity through which finance education has been revolutionized. The emergence of online finance education propelled by the linkages between students and tutors via the internet has made it easier to share facts on finance education. In addition, people are now able to ask questions that build their daily skills through asking or providing answers that have practical solutions. This can be achieved though blogging.

Online finance education also has the benefit of providing templates from which the practical application of finance theories can be based. For example, a budget planner can be customized to calculate allowable expenses to what proportions.

The traditional training in finance can also be delivered using the online finance education. There are now available e-business degrees that cover training in accounting, business management, actuarial sciences, human resource management, insurance, and international business management among others.

The demand for online training opportunity has fuelled the growth of online colleges or universities. The challenge in enrolling in online colleges is that you have almost no chance of ascertaining the authenticity and quality of service. At most, you can only view information about the college from the websites. The websites are however easy to manipulate to present incorrect information in a seemingly correct form.

As you search for the information on where to find online college or education to improve your financial knowledge, check for an institution that will provide more than just a certificate. You should be able to learn tips on how to get out of credit card debts, how to make the most from your mortgage investments and much more contemporary financial needs.

Posted in Uncategorized | Comments Off

Adding Finance Certifications to Your Stock Broker Resume Recipe

Getting some good finance certifications is without a doubt very much recommended if you want to pursue a career as a stock broker or a financial analyst for a big company. Being a stock broker or a financial advisor can really be achieved by anyone who graduates with a degree in economy but being successful in these professions requires much more than that nowadays as there are some finance related certifications that you would need to get to be able to increase your salary base and get you to a higher level in the financial world, or at least inside your company structure. Getting these certifications would definitely be worth the trouble as some firms requires the possession of these certificates on their employees resume should they want to get into a higher position in the company.

Having an employee who has finance certifications from CFP is a plus for a company as people who acquired CFP certifications are those who already passed their exam and follow through an education phase required by the CFP before they are even eligible to take the exam. One of the requirements actually requires the participant to have at least 5 years experience in working as a financial planner of which a stock broker fits into the criteria. The working experience requirement may be reduced to three years if the participant has a bachelor degree in finance. The kind of effort that one would need to show to even take a shot for the certification would greatly increase your desirability to your company, not to mention all of the priceless knowledge you would have as someone who qualified for finance certifications; you would be someone who is indispensable for your company.

The average of a stock broker salary without certifications is around $40,000. This may go up considerably if you are working in places with high salary average and if you have more than 5 years experience in the field, but you could never get to the top of the line without getting some of the finance certifications that you can get with further education. If you are already getting a decent amount by working more than 5 or even 10 years in the field, imagine how much money you would be getting if you spent some of that time taking basic courses every 2 or 3 years to get CFP finance certifications which by the end of the 5 years you would already have acquired. Hope this post was helpful in your endeavors.

Posted in Uncategorized | Comments Off

What Is The Cost Of A Physician Disability Insurance Cover?

Owing to the fact that the resources and assets at people’s disposal are shrinking day in day out, human beings have learned to be careful when it comes to spending. They will always remember to ask the question of what the cost of something will be. There are high chances that some people are interested in taking physician disability insurance and are wondering how much it will cost them. If you are one of them then keep reading to learn more.

Sincerely speaking it might not be possible for and individual to quote the exact cost of taking such a cover. Any person who comes up with such a figure might be wrong. They will be wrong because the conditions surrounding a single person might not be the same conditions surrounding another person. To determine therefore the amount of money an individual will be expected to part with will depend on some aspects which include the following:

Age of the insured

Once a person makes up their mind to go for Physician Own Specialty Disability Insurance then they should stay informed that their age will determine the amount of money they will have to pay as premiums. In most cases the amount of premiums increases as the age advances. This means that the younger a person is the cheaper their policy will cost.

This should be a motivating factor to the young people. They should try as much as possible to go for these covers because if they wait longer the price of the policy will go high. Taking this advantage can be a wise decision in one’s life.

The gender of a person

In most cases people forget thinking about gender of the person taking the cover. In general, the females have high chances of facing the risks insured against. This will imply that the higher the chances of getting impairments the more amount of premiums an individual should expect to pay.

Those people who are of a masculine gender will purchase the cover at a relatively lower price compared to their counterparts of the other gender.

Health history of a person

The health history of an individual can tell us more of what we should be expecting. Those people who have been having several ailments or those whose family tree is known for certain defects should be prepared to part with large sums of money. These health complications have high chances of making an individual suffer from a risk insured against.

An individual with a clean history in health issues should therefore be prepared to pay less amount of money in terms of premiums.

The type of policy

The insurance companies offer a wide range of policies. This means that when making a choice an individual should make sure that comparisons have been made. For instance an individual who gets attracted to the Guardian policy should be ready to pay a lot of money because this is the most expensive policy. So when taking Own Specialty Physician Disability Insurance the type and nature of policy taken is greatly vital to a person.

There is no way all these aspects can affect an individual negatively and therefore there is need of getting worried of things like one is a female, they are of an advanced age, or they have bad reputation in their health history all shall be well.

Posted in Uncategorized | Comments Off

Why Should One Go For Professional Disability Insurance?

How does it feel when a person is employed, is working and all is going well? They might be tempted to think that they will remain in such states for a very long time. The most important thing an individual should begin by appreciating is that the events of the next day, next hour or even next minute are uncertain. This is why a person should make sure that they have taken necessary precautions so that they can continue enjoy living on this earth.

It takes a few minutes to contract an impairment. To make the matters worse, there are some impairments which might make one unable to continue working. For instance, think about a news reporter who gets involved in an accident and ends up losing all their legs. Probably they will no longer be able to attend events and report as they used to do before the occurrence took place. This stretches to other several professions and therefore taking precautionary measures is what an individual should plan for. Some of the reasons as to why taking Own Occupation Disability Insurance policies remains benevolent to an individual include the following:

Ensures financial security

Every human being who is employed today has dependents. They also depend on what they earn for their daily upkeep. It might not be easy for such a person to survive and continue supporting the people they were supporting after an impairment given that they will no longer be employed. An individual who had taken a Professional Disability Insurance is assured of a happy living because they will be compensated.

There are some companies which pay up to 75 percent of what an individual used to earn. Even though an individual will be receiving less than what they used to earn, the most important thing here is that they have something to survive on. It can be frustrating for an individual who has no money, no employment and cannot work but has bills to settle.

Allows one time to transit to another profession

There are various types of professions across the world. Once an individual becomes disabled such that they cannot continue performing their work well, they should think about changing their profession. For instance in the case of a reporter, they can become an editor.

In most cases some training will be necessary to allow these people take up new roles. The compensation they receive will help them to go for such training activities. An individual who has nothing might not be able to change their profession because they lack moral and financial support.

Grants one mental solace

Think about someone who is bedridden because of an accident. This person has no food, no money and they have exhausted their savings. Such a person will have to survive at the mercy of friends, relatives and other well-wishers. At some point they might be taken as a luggage to those taking care of them.

When a person mentally surveys all these conditions and realize that it was not their mistake, they might contract mental frustration. The only way such a person will be healed is by getting an assurance that they have support. There is no need of waiting for an assurance that might never come. One has to go for Professional Own Specialty Disability Insurance and all shall be well with them.

Posted in Uncategorized | Comments Off

Get The Best Americas Doctor Disability Insurance

It is very important for doctors in America to have disability insurance. Unlike many other professions they work in an area of high risk. No doubt they are well trained educated and are working 40 hours a week, most of the time on their feet.

They need insurance to take care of any eventuality in their life wherethey fall ill and have to take rest. It is become extremely difficult for physicians to get disability cover in their own specialty. There is work being done at Doctor’s Disability Shop so that doctors can avail of a discount to get disability insurance for their ‘own specialty’

How Does Own Specialty Insurance Work?

Doctors are given the opportunity to choose their ‘own specialty’ disability insurance plan that is ideal for them. Once the doctor has decided on the plan, it is easy to apply since it is done electronically and does not require any paper work.

Disability Pro protects your income so you can provide for your family when you are faced with a disability. All that the physician needs to do is get the right amount of coverage. Disability Pro helps you to meet your financial needs when you are disabled and cannot take care of your patients. You can get remuneration which is equivalent to your own specialty.

Physician disability insurance covers the physician in his own specialty. The insurance stays with the physician even though he changes his employer. He can get up to $15,000 in monthly benefits. If it is catastrophic disability the doctor can get nursing at home and health care. All physicians get 15% reduction while AMA members get 35% reduction.

Physician’s Disability Insurance Policies

There are different types of disability insurance policies that physicians can avail of. They are Mass Mutual, MetLife, Berkshire Life (Guardian), Principal, and Union Central Life. Many of the provisions are same in each of the companies. But there are a few differences which may help to choose the particular insurance company.

It is very important to classify the medical specialty to determine the premium rate. The higher the occupational classification assigned to the medical profession the lower is the premium rate. Different companies may assign a different class of occupation to the profession which might change the rate of premium. The financial planners or the agents are in a better position to advise the best insurance company to insure as per the medical specialty.

The Best Physician Disability Insurance

Like all professions doctors also take precautions to see that health and life insurance are taken care of in their life and try to invest wisely for a good retired life. But many times they do not take into account a disability or injury.

The chances of a disability and injury are quite high and at such times it is difficult for social security, worker’s compensation, insurance and savings to meet all the bills. Disability insurance is a necessity. You have to know what the coverage that the disability insurance provides and the policy that is not taxable. The agents are the best people to guide you in taking the right policy.

So, if you are a physician who wants to take disability insurance contact the agents to find out the best policy for you.

Posted in Uncategorized | Comments Off

Why Do You Md Own Specialty Disability Insurance

When it comes to insurance types that are usually very much ignored, disability insurance tops the list. This is due to the fact that you hardly see people paying for disability insurance as they are more concerned about auto insurance and the more popular type of insurances. Generally, you might not know about habits you indulge in or the fact that your health is deteriorating regularly until you are suddenly down. Furthermore, there are also a number of sudden disasters that could suddenly make an individual disable in an instant, especially accidents. This is apart from the unpredictable nature of the body as illness or disease that could lead to disability can attack an individual in an instant.

Md own specialty disability insurance is a type of insurance policy that covers a good percentage of your monthly income from your job in the instant that you are suddenly unable to do any time of work. Overall, you will be protected in terms of your finances, should you become unable to work. Most people find it difficult thinking about disability as nobody wishes to be disable. This notwithstanding, there are several people who due to one disability or the other cannot work. With a disability insurance, you will be protected from having to face serious financial hardships if you suddenly become disable. Here are some reasons why you should have a Md own specialty disability insurance.

Income Loss

A major reason why you will need Md own specialty disability insurance is as a result of income loss. If you are losing your source of income due to disability, you will be getting some paid sick leave. However, the expenses on diagnosing what is wrong with you, treating it and recovering from the disability could be huge. Furthermore, your monthly expenses such as feeding and toiletries amongst others will continue. Even though your medical bills are to be covered by a medical insurance, you can still become stranded due to the other expenses. Furthermore, when your source of income is completely cut off due to disability and you have bills to continue to run, own specialty disability insurance can go a long way to help you cater for your bills.

Medical expenses

Even with your medical insurance, the increasingly expensive cost of healthcare can be a major challenge. You will need to continuously pay bills and buy drugs all through the period you need treatment and recovering. There are cases where a therapists or other specialist might be required to speed up your recovery. All of these require a lot of money. The transportation to and fro the hospital for check-ups will also require spending more money.

Other expenses

Miscellaneous expenses will also come up while you are suffering from your disability and unable to do any paid job. Having enough money to still sometimes make yourself happy such as going for dinner and even attending birthdays and other celebrations with friends, will go a long way to save you from a stressful and boring life, during your period of disability.

Posted in Uncategorized | Comments Off

Disability And Disability Insurance For Doctors

Disability has been described as a condition in which the sufferer is unable to perform optimally the normal day to day functions which they used to be involved in. For doctors disability is a condition in which they are unable to attend to their patients any longer. They cannot carry out surgeries or go to clinic and all the other numerous activities which they are usually involved in.

During the course of work and over a period of time, it is possible for a doctor to develop some kind of disability or the other which can seriously impair the functions of the doctor. Doctor Disability Benefitsdescribes the way which insurance can be used to ensure that doctors do not suffer unduly in the case of any eventuality and they get disabled and unable to work.

Some of these disabilities include

1. Cardiovascular diseases and diseases of the circulatory system- this might be due to the fact that long hours are spent standing up and working. It has been noticed that a lot of doctors suffer from heart diseases and circulatory system health challenges. When these sicknesses impair and affect the normal day to day function of the doctor then his ability to function and attend to his clients is impaired.

2. Musculoskeletal illnesses- the long hours of standing and not sitting down can also affect the bones and joints of doctors. This can lead to illnesses such as rheumatism, arthritis and the likes. One problem with these illnesses is the amount of pain which sufferers go through over the course of the illness. This suffering makes it most of the times impossible for doctors to attend to patients and perform surgeries.

3. Mental disorders- doctors are also human like the people they treat and so they are also prone to suffering from whatever illness which humans suffer from. One of such problems is psychiatric illness. Some doctors while on the job have been seen and reported to have exhibited erratic behaviour. When this wrong behaviour was brought under scrutiny, they found out that the doctors were actually suffering from one mental illness or another ranging from plain depression to schizophrenia and even manic depressive disorders. All these illnesses will certainly affect the doctor’s ability to function optimally and properly. In such an instance such a doctor might be asked to stop working.

All the illnesses mentioned above and much more can deter a doctor from being able to continue to function well in the capacity which is expected of him. When a doctor suffers from any of such disabilities, it will be a thing of sadness if such a doctor does not have an insurance plan. A disability insurance plan is a kind of insurance plan. If a doctor takes out a policy which has disability insurance as the thrust of its focus, such a doctor is better placed to ride out the waves of life which such disability has thrown at him.

Posted in Uncategorized | Comments Off