Considerations for Implementing Musharakah in Microfinance b

Top 20 FREQUENT WORDS

musharakah 10 profits 7 ratio 7 shirkat 7 cash 6 accounting 5 basis 5 daily 5 amount 4 partner 4 partners 4 techniques 4 arrangements 3 based 3 business 3 closing 3 commercial 3 distributed 3 distribution 3 estimated 3 ethics 3 inventory 3 investment 3 losses 3 moral 3 movement 3 obtain 3 opening 3 participants 3 required 3

DOCUMENT KEY POINTS

• shirkat ul aqd i types if shirkat ul amwal a all participants invest some amount of capital in a commercial enterprise
• if shirkat ul wujooh a no investment required commodities purchased on deferred payment basis and sold at spot

• losses i losses must be shared in the ratio of capital invested unlike profits where ratio may be greed upon
• i normal principle is that every partner has a right to take part in management

• termination i musharakah shall be terminated as follows i by giving notice to all other partners

• i capital may be valued at the beginning and end of period and profits distributed in agreed ratio
• i sleeping partners share cannot be more than his proportion of investment

• ethics and morals i challenges cont if regulatory issues pursuit of default cases is time consuming and costly
• if cash based economy no verification or recording of transactions through the banking channels

• knowledge of the business i obtain understanding of the different sectors by conducting sector studies and market research
• i obtain historical perspective of level of earnings of the musharakah participants

• accounting techniques i activity based estimation in absence of detailed accounting systems and records
• i business operations are generally entirely cash based with low capital requirement

• daily movement of inventory i a simple form designed to show opening and closing inventory together with movement on a daily basis
• i form should include sale and purchase prices i banks obtain copy of form daily and conduct surprise physical counts periodically

• i sales can be estimated by adjusting for opening and closing inventory
• payment for carriage i amount paid will indicate number of trips made

• cash reconciliation i reconcile movement of cash to opening and closing balances on a daily basis
• i a simple form can be designed and used daily to summarize cash movements

• remarks i the entity should examine problems currently being faced in microfinance as the type of customer and creditworthiness are likely to be same
• i similar conditions may prevail under musharakah arrangements and may require similar solutions

• remarks cont i the ability of businesses to meet financial obligations under musharakah arrangements is enhanced as partner owner is required to share in profits earned
• i as this is more attractive to businesses banks are likely to build large musharakah portfolios in a short time

Please note, This is an auto generated summary based on sentances position in the document and other factors

DOCUMENT WORD ANALYSIS

Main Category

AlHuda Material\islamic micro

KeyWords

islam finance bankable contract client profit purchase financial asset microfin risk sale transact price murabahah busi sharia goodasset payment invest

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DOCUMENT REFERENCES

Number of Pages

21

Published Date

2016-09-17 00:47:11

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