TIPE OF MUDHARABAH CONTRACT:
1. Mudharabah is Unrestricted Mudharabah.
2. Mudharabah Muthlaqah is Restricted Mudharabah in type of business, tenor, and place in accordance with the requirement of fund owner
FEATURE AND MECHANISM
1. Bank shall act as fund owner (shahibul maal) that provides funds for working capital, and customer shall act as fund manager (mudharib) in the business activities;
2. Bank shall retain rights in the supervision and development of customer’s business even though it shall not directly participate in the management of customers business activities. For example, Bank is entitled to review and to request evidence related to business report based on reliable supporting documents;
3. Profit sharing ratio from fund management shall be specified in advance;
4. The agreed ratio of profit sharing may not be changed in the course of investment period, unless upon mutual agreement of both parties;
5. Term of financing based on Mudharabah, fund repayment and profit sharing ratio shall be determined in accordance with the agreement between Bank and customer;
6. Financing based on Mudharabah agreement will be provided in cash and/or goods and not in the form of receivables or claims;
7. In the event where financing based on Mudharabah agreement is provided in the form of cash, the amount must be clearly stated;
8. In the event where financing based on Mudharabah agreement is provided in the form of goods, the concerned goods must be appraised based on market value (net realizable value) and the amount must be clearly stated;
9. Repayment of financing based on Mudharabah agreement is conducted in two ways: in installment or bullet payment based on the term of financing based on Mudharabah agreement;
10. Profit sharing is conducted by referring to the business report with the reliable supporting document; and
11. Loss of customer’s business that can be borne by Bank as fund owner (shahibul maal) is maximum the same amountas the financing provided (ra’sul maal).
1. For Bank
a. as one of the forms in financing;
b. earning revenue in the form of profit sharing in accordance with the business performance managed by customer
2. For Customer
ulfilling the need of business capital through bank partnership system
RISK ANALYSIS AND IDENTIFICATION
1. Credit Risk due to customer’s default;
2. Market Risk due to the movement of exchange rate if the financing based on Mudharabah agreement is provided in foreign currency;
3. Operational Risk due to internal fraud such as incorrect record of outstanding value, bribery, inconformity of tax reports (intentionally), errors, manipulation and marking up in accounting and reporting.