Uses of Musharakah and Mudarabah

Musharakah and Mudarabah modes of financing can be used in the following areas:

Asset Side Financing

• Short/medium/long - term financing
• Project financing
• Small & medium enterprises setup financing
• Large enterprise financing
• Import financing
• Import bills drawn under import letters of credit
• Inland bills drawn under inland letters of credit
• Bridge financing
• LC without margin (for Mudarba)
• LC with margin (for Musharakah)
• Export financing (Pre-shipment financing)
• Working capital Financing
• Running accounts financing / short term advances

Liability Side Financing

• For current/ saving/mahana amdani/ investment ccounts (deposit giving Profit based on Musharkah/Mudarbah – with predetermined ratio )
• Inter- Bank lending / borrowing
• Term Finance Certificates & Certificate of Investment
• T-Bill and Federal Investment Bonds / Debenture.
• Securitization for large projects (based on Musharkah)
• Certificate of Investment based on Murabahah (Eg: Al Meezan Riba Free )
• Islamic Musharakah bonds (based on projects requiring large amounts – profit based on the return from the project)  

Source: Dr. Muhammad Imran Ashraf Usmani, Meezan Bank’s Guide to Islamic Banking.