MUSHARAKA

Musharaka is a form of partnership between two parties where each party contributes to the capital of the partnership in equal or varying proportions, either to establish a new venture or share in an existing one”.
Musharaka means a relationship established under a contract by the mutual consent of the parties for sharing of profits and losses in the joint business. It is an agreement under which the Islamic bank provides funds, which are mixed with the funds of the business enterprise and others. All providers of capital are entitled to participate in management, but not necessarily required to do so. The profit is distributed among the partners in pre-agreed ratios, while the loss is borne by each partner strictly in proportion to respective capital contributions.