| An arrangement according to which capital is
advanced to an intermediary (be it a bank, a finance corporation
or business firm), on the basis of mudarabah which further gives
this capital to a third party again on the basis of mudarabah. In
this way two independent contracts take place. The intermediary
(say I) enters into contract with the one who advances money on
the basis of mudarabah (say S), and the one who takes it on the
basis of mudarabah (say E). The profit from the business of E,
shall be distributed between 'E' and 'I' in a given proportion,
but any loss on the capital shall be borne by'!' alone. Similarly,
any profit earned by'!' shall be shared by'S' and 'I' in a
predetermined ratio but any loss to'!' shall be borne by'S' alone.
In this way'!' acts as agent, and E sub- agent of S. |
