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Musharika
(redirected from Musharakah)

   Also found in: Wikipedia 0.01 sec.
Musharika
A partnership in Islamic finance in which all partners contribute capital. For example, if Joe wants to start a business, he may form a musharika into which he places $20,000. A bank may then contribute $40,000 and split profits with Joe based upon some agreed-upon formula.

Musharikas are important in Islamic finance in part because they are the most straightforward. That is, a musharika does not attempt to imitate a debt product, which is controversial. Rather, it simply involves equity financing by an investor. However, musharikas are difficult to structure in some non-Muslim countries, especially the United States, because some banks are not permitted to make equity financing arrangements.


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Ijarah, Murabahah and Musharakah have been the main types of structures, accounting for almost 80% of the total issuance.
Notwithstanding the above, the RHB Group Shariah Council is of the opinion that Tawarruq should be considered as a last resort as there are other acceptable options to fulfill the customers' needs such as Ijarah, Istisna', Mudharabah, Musharakah and so on," she advises.
A significant portion of bank's assets consists of Mudarabah, Ijarah and Musharakah based transactions and the bank may adopt a policy for further enhancing the participatory modes of financing.
 
 
 
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