Musharaka

The literal meaning of the word Musharaka is sharing. Under Islamic law, Musharaka refers to a joint partnership where two or more persons combine either their capital or labor, forming a business in which all partners share the profit according to a specific ratio, while the loss is shared according to the ratio of the contribution. It is based on a mutual contract, and, therefore, it needs to have the following features to enable it to be valid:Parties should be capable of entering into a contract (that is, they should be of legal age).The contract must take place with the free consent of the parties (without any duress).In Musharaka, every partner has a right to take part in the management, and to work for it.However, the partners may agree...

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MURABAHA

1. Murabaha: (Cost-Plus Financing) Sale on profit. Technically a contract of sale in which the seller declares his cost and profit. This has been adopted as a mode of financing by a number of Islamic banks. As a financing technique, it involves a request by the client to the bank to purchase a certain item for him. The bank does that for a definite profit over the cost which is settled in advance. Some people have questioned the legality of this financing technique because of its similarity to riba or interest. 2. Murabaha:A contract of sale between the bank and its client for the sale of goods at a price plus an agreed profit margin for the bank. The contract involves the purchase of goods by the bank which then sells them to the client...

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SWEDEN: ISLAMIC BANK CONSIDERS OPENING BRANCH

The first Islamic bank in Sweden may soon be opening its doors.Talking to Swedish Radio news a spokesman for the Islamic Bank of Britain, Shaher Abbas, admitted contact had been made between the bank and the Swedish authorities.Abbas would not speculate when the bank would open in this country but the plan is to capture the European market with offices in Germany and Sweden.The bank was the first Islamic bank to open in Europe four years ago and now there are eight branches in the UK.Since the banks follow Sharia law, they do not pay or collect interest. Abbas says that this puts them in a good position during the current credit cris...

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