1. 1 Shariah guided Modes of investment-1 Dr. Abu Kholdun Al-Mahmood MBBS, MPhil, PhD

2. 2 Areas of discussion: Various Bai Modes - Bai-Murabaha, Bai- Muajjal, Bai-Salam, Bai- Istisna, Bai- Istijrar etc, Difference between them, Various Bai Modes - Bai-Murabaha, Bai- Muajjal, Bai-Salam, Bai- Istisna, Bai- Istijrar etc, Difference between them, Investment Products under Islamic Banking, Comparison with Conventional Loans and Advances. Investment Products under Islamic Banking, Comparison with Conventional Loans and Advances.

3. a.Bai Mechanism i. Bai-Murabaha ii. Bai-Muajjal iii. Bai-Salam iv. Bai-Istisna’s

4. 4 b. Shirkat / Sharing or Partnership Mechanism.b. Shirkat / Sharing or Partnership Mechanism. i Mudarabai Mudaraba ii Musharakaii Musharaka c. Ijara/ Leasing Mechanismc. Ijara/ Leasing Mechanism i. Ijara / Leasingi. Ijara / Leasing ii. Hire Purchaseii. Hire Purchase iii. Hire Purchase Under Shirkatui Meelk. (Partnership in Ownership)iii. Hire Purchase Under Shirkatui Meelk. (Partnership in Ownership)

5. 5 Investment can be made by the Islamic Banks under the following Modes.Investment can be made by the Islamic Banks under the following Modes. Profit & Loss Sharing ModeProfit & Loss Sharing Mode Shirkat / MusharakaShirkat / Musharaka

6. 6 InvestmentInvestment Investment is the action of deploying funds with the intention and expectation that they will earn a positive return for the owner. Funds may be invested in either real assets or financial assets.Investment is the action of deploying funds with the intention and expectation that they will earn a positive return for the owner. Funds may be invested in either real assets or financial assets.

7. 7 Investment can be made by the Islamic Banks under the following Modes.Investment can be made by the Islamic Banks under the following Modes. Profit & Loss Sharing ModeProfit & Loss Sharing Mode Shirkat / MusharakaShirkat / Musharaka The term refers to a financing technique adopted by Islamic Banks. It is an agreement under which the Islamic bank provides funds which are mingled with the funds of the business enterprise and others. All providers of capital are entitled to participate in the management but not necessarily required to do so. The profit is distributed among the partners in pre­ determined ratios, while the loss is borne by each partner in proportion to his contribution.The term refers to a financing technique adopted by Islamic Banks. It is an agreement under which the Islamic bank provides funds which are mingled with the funds of the business enterprise and others. All providers of capital are entitled to participate in the management but not necessarily required to do so. The profit is distributed among the partners in pre­ determined ratios, while the loss is borne by each partner in proportion to his contribution.

8. Profit sharing Loss bearing Mode : Al-Mudarabah The word ‘Mudarabah’ has been derived from the Arabic word ‘Darb’/ ‘Darbum’. It means movement to earn rehmat (Munafa) of Allah. Mudarabah is a form of partnership where one of the contracting parties called the ‘Shahib-al- Maal’ or the Rabb-ul-Maal’ (the financier) provides a specified amount of capital and acts like a sleeping’ a dormant partner which the other party, called the Mudarib (entrepreneur), provides the entrepreneurship and management for earing on any venture, trade, industry or service with the objectives of earning profits. Mudarabah is a form of partnership where one of the contracting parties called the ‘Shahib-al- Maal’ or the Rabb-ul-Maal’ (the financier) provides a specified amount of capital and acts like a sleeping’ a dormant partner which the other party, called the Mudarib (entrepreneur), provides the entrepreneurship and management for earing on any venture, trade, industry or service with the objectives of earning profits. 8

9. The Mudarib is in the nature of a trastee as well as an agent of the business. Profit in distributed as per preagreed ratio while the loss is entirely borne by the Shahib- al-Maal.