Modaraba is  a business in which a person participates with his money and another with his efforts or skill or both his efforts and skill and shall include Unit Trusts and Mutual Funds.

The Modaraba is a contract of sale at cost price plus a known profit margin agreed between buyer and seller. The Modaraba can have two aspects: Direct transaction between a seller and a buyer, (The Tripartite transaction between a final buyer or a first seller and an intermediary seller (executing the purchase order). This latter formula was adopted in Islamic banking practices. The Bank intervenes as the first buyer vis-a-vis the supplier and the reseller in respect of the purchaser (client).

Benefits of Using Modaraba Financing

Modaraba is a form of financing that enables Islamic banks to finance, in accordance with their principles, both the operational needs of their customers (stocks, materials, intermediate products) and their investment.

Modaraba Company is a company engaged in the business of floating and managing modaraba.

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