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Types Of Mudarabah

What are the different types of Mudarabah?

There are two types of Mudarabah: restrictive and unrestrictive.

Restrictive Mudarabah means that the investor has specified investment details in the Mudarabah contract and has restricted the working partner within the scope of such specifications. Due care and precaution must be taken by the working partner to honor the restrictions imposed by the investor.

Unrestrictive Mudarabahs mean that the investor has granted the working partner the right to undertake any lawful investment. The working partner has the right to invest in any suitable investment that is reasonably expected to yield profits. It is the responsibility of the working partner to avoid unlawful and high-risk investments, and the working partner is liable for any losses suffered from such investments.

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