Sukuk al-mudarabah
Sukuk whose proceeds are capital in a mudarabah managed by the issuer; used by some Islamic banks to raise regulatory capital.
Sukuk al-mudarabah represent holders' shares in mudarabah capital that the issuer manages as mudarib, with profit shared by an agreed ratio and financial loss borne by the capital providers. Islamic banks have used the structure to raise capital intended to absorb losses. IIFM publishes templates for Tier One sukuk al-mudarabah, including a prospectus, a master mudarabah agreement and a declaration of trust.
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
SukukCertificates of equal value representing undivided shares in the ownership of assets, usufruct, services or a project.MudarabahA partnership of capital and work: profit is shared by an agreed ratio, while financial loss falls on the capital provider.Sukuk al-musharakahSukuk whose holders are partners in a venture, sharing profit by agreed ratios and loss in proportion to capital.Capital adequacy (Islamic banks)Holding enough capital against risks; for Islamic banks, the IFSB adapts the Basel rules to each Shariah contract.