Mudaraba is a partnership contract, where one party provides full capital and the other one manages the business. The capital provider is called ‘Sahib-Al-Maal/Rab-Al-Maal’ and the user of the capital is called ‘Mudarib’ (here it will be DBH Finance PLC, shortly DBH). As per Shari’ah principles, the Mudarib will conduct the business independently following Shari’ah principles. The Sahib-Al- Mal may provide advices, if he deems fit but he cannot impose any decision over the Mudarib. Profit, if any, is divisible between the Sahib-Al-Maal and the Mudarib at a predetermined ratio, while loss, if any, is borne by the Sahib-Al-Maal. But, Mudarib has to bear the loss of capital in case of negligence, misconduct and breach of contracts by Mudarib. The deposits, received by Islamic Banks/Financial Institutions (FIs) under this principle are called Mudaraba Deposits. Here, the depositors are called Sahib-Al-Maal and the Bank/FI is called Mudarib.

Profit distribution under Income Sharing Ratio (ISR) Method:
ISR is a unique method for income distribution between the Mudarib and Sahib al-Maal. In order to ensure Shari’ah compliance, any fixed rate of return for the ‘Sahib al-Maal’ (Depositors) can not be declared, rather Income Sharing Ratio (ISR) shall be declared and agreed upon at the time of opening of an account. Based on ISR, profit rate for the ‘Sahib al-Maal’ is calculated and determined at the end of each month. This framework offers a very simple and transparent process of profit calculation. If the client wants to know the expected rate of profit against their deposits, they can be given a range of expected profit. Previous months’ historical rate of profits are available at this website.