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GlossaryIslamic Finance

Mudarabah (Trustee Financing)

A partnership where one party provides 100% of the capital while the other provides managerial expertise.

Detailed Definition

In a Mudarabah contract, the investor (Rab-ul-Mal) supplies the funds and the fund manager/entrepreneur (Mudarib) provides operational management. Profits are divided according to a pre-agreed percentage, but financial losses are borne solely by the capital provider unless caused by misconduct.

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