Restricted mudarabah
A mudarabah in which the capital provider limits where, how or for what the capital may be invested.
A restricted mudarabah, or mudarabah muqayyadah, is one in which the rabb al-mal imposes restrictions on the mudarib, for example on the sector, location, period or type of investment. Bank Negara Malaysia's policy document distinguishes it from unrestricted mudarabah on this basis. If the mudarib breaches the agreed restrictions, it becomes liable for the resulting losses.
Sources
This entry explains a term; it is not a Shariah ruling. Approving a product is for each institution's own Shariah board and regulator.
Related terms
Unrestricted mudarabahA mudarabah that leaves the manager free to invest the capital in any permissible business at its discretion.Restricted investment accountAn investment account whose holder limits where, how or for what purpose the bank may invest the funds.MudarabahA partnership of capital and work: profit is shared by an agreed ratio, while financial loss falls on the capital provider.Rabb al-malThe capital provider in a mudarabah, who funds the venture, shares profit by the agreed ratio and bears financial loss.