Wednesday, September 28, 2011

Islamic Finance Instruments: Modarabah

About Modarabah Contracts:

This is a kind of partnership where one partner gives money to another for investing in a commercial enterprise. The investment comes from the first partner who is called “Rab-ul-Maal” while the management and work is an exclusive responsibility of the other, who is called “Mudarib” and the profits generated are shared in a predetermined ratio.
Excerpts taken from Meezan Banks Guide to Islamic Banking by Imran Usmani

Salient features of Modaraba:

    The owners of capital and the management of capital are completely segregated. The manager of capital may not include or invest their capital in the modaraba. The owner may not specify how to operate the business, however; they can keep an eye on the manager (the Mudarib).

In case of loss to modarabah, the owner of capital suffer losses whereas the modarib may not receive any remuneration for conducting business. In case of profit, the owners and the managers of capital enjoy the benefit in pre-agreed proportions.

In most of the cases, the owners of capital enjoys limited liability of the business conducted by the modarib.

Tax Benefits of Modaraba:

In pakistan modaraba is exempt from income tax if 90% of income is distributed to the modaraba certificate holders

Below is the list of Modarabah Management Companies and listed Modarabah Instruments:


List of Modaraba Management Companies in Pakistan

1. A.R. Management Services (Pvt) Ltd.

2. A.R.T. Modaraba Management (Pvt) Ltd.

3. Allied Engineering Management Company (Pvt) Ltd

4. Al-Noor Modaraba Management (Pvt) Ltd.

5. Al-Zamin Modaraba Management (Pvt) Ltd.

6. B.R.R. Guardian Investment (Pvt) Ltd.

7. BankIslamic Investment (Pvt.) Limited

8. Constellation Management Company (Pvt) Ltd.

9. Crescent Modaraba Company Ltd.

10. E.A. Management (Pvt) Ltd.

11. Fidelity Capital Management (Pvt) Ltd.

12. Global Econo Trade (Pvt) Ltd.

13. Habib Bank Financial Services (Pvt) Ltd.

14. Habib Modaraba Management (Pvt) Ltd.

15. I.B.L. Modaraba Management (Pvt) Ltd.

16. National Bank Modaraba Management Company Ltd.

17. Paramount Investments Limited

18. Premier Financial Services (Pvt) Ltd.

19. Prudential Capital Management Ltd.

20. Punjab Modaraba Services (Pvt) Ltd.

21. Royal Management Services (Pvt) Ltd.

22. Standard Chartered Services of Pakistan (Pvt) Ltd.

23. KASB Modaraba Management (Pvt) Limited

24. UDL Modaraba Management (Pvt) Ltd.

25. Islamic Investment Bank Ltd.

Listed Modarbas

1. Imrooz Modaraba

2. Tri-Star Modaraba 

3. Allied Rental Modaraba

4. Al-Noor Modaraba

5. Al-Zamin Leasing Modaraba

6. Unicap Modaraba

7. Trust Modaraba

8. B.R.R. Guardian Modaraba

9. Crescent Standard Modaraba

10. Modaraba Al-Mali

11. Modaraba Al-Tameer

12. Modaraba Al-Makatib

13. Modaraba Al-Istetmar

14. Constellation Modaraba

15. Elite Capital Modaraba

16. B.F. Modaraba

17. Fidelity Leasing Modaraba

18. Treet Manufacturing Modaraba

19. Habib Bank Modaraba

20. Habib Modaraba

21. IBL Modaraba

22. National Bank Modaraba

23. Paramount Modaraba

24. Equity Modaraba

25. Prudential Modaraba

26. Punjab Modaraba

27. Pak Modaraba

28. Standard Chartered Modaraba

29. KASB Modaraba

30. UDL Modaraba

31. Islamic Modaraba

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