Past
Semester Question
MARCH 2013
Question 6
a)
Explain the concept of the following terms:
i)
Al-Wadiah
-Wadiah corresponds to safekeeping,
custody, deposit and trust. In Islamic finance, wadiah refers to the deposit of
funds or assets by a person with an Islamic bank. There are two types of
Wadiah.
a) Wadiah Yad-Dhamanah
-Wadiah yad Dhamanah is a
safekeeping with guarantee. The bank receives deposits from the
customer(depositor) and the bank then were given the permission to utilize the
money for investment purposes.
b) Wadiah Yad Amanah
- Wadiah yad Amanah is an
act of trust, where the trustee(bank) will be given the rights to keep the
money of the depositor in his safe custody. The depositor are given clear and
understandable information about the contract.
ii)
Al-Mudharabah
-Mudharabah is a special kind of partnership
where one partner provides the capita to the other for investment in a
commercial enterprise. There are two types of mudharabah:
a) Mudharabah
Muqayyadah
- The actions of the Mudarib which the fund
manager is restricted. However, it should not be in a conduct that would
unjustifiably constrain the actions of the Mudarib in his operations.
b) Mudharabah
Mutlaqa
- Mudarib (fund manager) can employ his own good
judgement and has complete authority on the management of capital. But, Mudarib
cannot, without consent of Rab-ul-Maal for lend money to anyone. And,if they
want to have an extraordinary work, which is beyond normal routine of the
traders, he cannot do so without the express permission from the customer
(Rab-ul-Maal).
