1. PRINCIPLE OF
MUSYARAKAH

2. DEFINITION OF
MUSYARAKAH
 Valid as it is established in the Quran :
“ truly many are the partners in business
who wrong each other except those who
believe and work deeds of righteousness,
and how few are they.”
Contract of partnership between two or
more people.

3. CONT…
 All partners :
 Contribute capital
 Participate in management
 Share profit according to pre-agreed
ratio
 Share the losses in proportion of
capital ratio

4. 1. General Musyarakah (Shirkah al-
milk)
Co-ownership without entering into a
formal partnership agreement
2. Contractual (Shirkah al-uqud)
Contract (proper partnership)
agreement either written or orally
(formal or informal)
•Divided into 4 kinds

5. AL-INAN
 All partners need not be adults or
have equal share in capital.
 Not equally responsible for
management.
 Profit share may be unequal.
 Must be clearly specified.
 Share in losses according to capital
contribution.

6. AL-MUFAWADAH
 Partners are adults
 Equal in contribution of capital
 Ability to take responsibility
 Share profit and losses
 Responsible for liabilities.

7.  Capital
 Only based on money not on commodities
 Capital must be in monetary form
 Contracting Parties
 Parties involved contribute funds.
 Parties have right to exercise executive
powers in accordance with agreed formula.

8. AL- ABDAN
 The partners contribute skills
and efforts without contributing
capital.

9. AL- WUJUH
Partners use their goodwill,
credit-worthiness and their
contract for promoting their
business without contributing
capital.

10.  Work
 Partners belong in the same trade
 Work in one place
 All partners participate in actual work
 Get profit according to their work
 Risk
 Entails lower risks (involves risk sharing
through partnership)
 Number of individuals in a position are limited.

11. 1.Partners use capital jointly to generate a
surplus
2.Profit or losses will be shared between
partners according to equity ratio
3.Involves in the equity structure of Islamic
banks

12. 4.Depositor are concerned- Islamic bank as
Mudarib (manage funds)
5.Al- Musyarakah is a profit and loss
sharing partnership
6.Bank and customer both contribute capital
and expertise in project