Investors deposit OMR 800,000 with Islamic Bank under a Mudaraba contract for a period of 12 months and a profit allocation set out in the agreement as 80% to the investors (Arbab al Mal) and 20% to Islamic Bank (as Mudarib). The investors receive Mudaraba Certificates (investment deposit certificates) in exchange for their deposits. Islamic Bank (as Rab al Mal) invests the OMR 800,000 in Islamic Enterprises AloJaka Enterprise Private Limited (the Mudarib) to build a new factory. AloJaka Enterprise Private Limited contributes its expertise in managing the project, but no capital. Islamic Enterprises is responsible for the day-to-day management of the project and will deduct its management fee from the profits of the development. Islamic Enterprises' Mudarib share is based on a percentage of the profit and agreed to be 20% and 80% belongs to Bank. At the end of the Mudaraba, when the factory is completed, it is sold at a pre-agreed amount of OMR 1000,000. Islamic Bank recovers its OMR 800,000 capital and the OMR 200,000 profit is returned. 

7.Explain what is two-tier Mudharaba.

8.Explain how the profit is shared between the Bank as Rab ul Mal and AloJaka Enterprise Private Limited as Mudharib in second Mudharaba and Bank as Mudharib and the Depositors as Rab ul Mal in the first Mudharaba.

9.Assume Mr. Ronaldo enters into a Housing Finance with an Islamic Bank under Diminishing Musharaka Contract. The total value of the house is OMR 1000000 where Mr. Ronaldo provides 30% down payment and the balance 70% is invested by the bank. Rental value of OMR 10000 per year is agreed by both parties. The bank's investment of OMR 700000 will be bought by the Mr. Ronaldo in 10 years in 10 equal instalments. 

10.Explain what is diminishing Musharaka contract based on a home financing product and how it differs from the conventional home financing product 

 

11.Calculate the annual payment Ronaldo will be paying to the Bank in each of the first three years. The value should show the share of rent and capital repayment separately.