Mudarabah in Islami Bank Bangladesh Limited : analysis of applied principles

Abstract

Mudarabah is one of the techniques which a large number of Islamic banks have adopted to finance their customers' business requirements all over the world and it is an old banking technique approved by Islamic Shari`ah. Since the very beginning, Islami Bank Bangladesh Limited (IBBL) has been facing some challenges to make successful practices of two very important modes, mudarabah and musharakah. To ensure that mudarabah is free from riba and in line with the Islamic laws, the current application of mudarabah in IBBL needs careful scrutiny, and all existing deposits and investments should be examined. This study has investigated these needs from the Shari`ah perspectives. It adopts the qualitative research methodology. However, this study has also utilized the analytical method to critically analyze the principles of mudarabah as discussed by classical scholars as well as the opinions and views of contemporary Muslim scholars to determine the preferable views related to mudarabah issues. Moreover, it has examined mudarabah principles in IBBL to identify issues and challenges, using the data collected from consultations. This research has arrived at certain findings. Most important of them are as follows: IBBL fixes a minimum balance in savings accounts. On the other hand, according to the classical fiqh rules, the Islamic bank should not fix a minimum balance in any account that is based on mudarabah contract. The depositor has limited power on his own wealth due to determination of the minimum balance. All mudarabah deposit accounts are secured and guaranteed in IBBL. It is confirmed that the depositors will not lose their asset, even in the case of bank's business crisis and insolvency; which contradict the ethics of Islamic commercial law. Temporary profit distribution and the Profit Equalization Reserve (PER) policy are also against the rules mentioned by classical jurists. Hence, all mudarabah contracts' operations in IBBL should be reviewed and tailored under Shari`ah principles. Moreover, research on Islamic economics, banking and finance should be expanded by IBBL's Shari`ah board and research center. All experiences, thoughts and research findings of bankers, experts and researchers should be harmonized and united.