Mudaraba is a financing technique used by Islamic banks. It is an investment partnership in which the bank plays the role of an investor (Rab el Mal), by committing to fully finance the project. In return, the contractor (Mudarib) must ensure project management.
Remuneration is based on an allocation key fixed in advance as a percentage of the profits of the contractor. Possible losses should be borne by the sole donor of capital. The company director waives any variable remuneration for its work.
Today, Mudaraba can be applied to various economic activities, and with Musharaka, they represent the most faithful techniques with the spirit of trade as advocated by Islam.