What is Mudhaarabah?

Answer

Briefly, Mudhaarabah is a partnership. The one partner provides the capital while the other partner is the manager. The provider of the capital is called the Rabbul Maal and the manager is called the Mudhaarib.

Only the Mudhaarib operates the business. The Rabbul Maal does not participate in the running of the business.

The percentage profit-sharing has to be agreed and fixed before initiating the business. The Mudhaarib is entitled to only his share of the profit.

He may not take a 'wage' from the business.