alahaiii musharakah mutanaqisah ....

The Musharakah Mutanaqisah Partnership (MMP) contract, on the other hand, is based on a diminishing partnership concept. Here, there are two portions to the contract. First, the customer enters into a partnership (musharakah) under the concept of ‘Shirkat-al-Milik’ (joint ownership) agreement with the bank. Customer pays, for example, 10% as the initial share to co-own the house whilst the bank provides for the balance of 90%. The customer will then gradually redeem the financier’s 90% share at an agreed portion periodically until the house is fully owned by the customer. Second, the bank leases its share (90%) in the house ownership to the customer under the concept of ijarah, i.e. by charging rent; and the customer agrees to pay the rental to the bank for using its share of the property. The periodic rental amounts will be jointly shared between the customer and the bank according to the percentage share holding at the particular times which keeps changing as the customer redeems the financier’s share. The customer’s share ratio would increase after each rental payment due to the periodic redemption until eventually fully owned by the customer.


1. Financing based on Musharakah Mutanaqisah Contract

Islamic financial institution has submitted a proposal to offer property financing product based on the concept of musharakah mutanaqisah. Basically, the modus operandi of the property financing product based on musharakah mutanaqisah is as follows:

i. The customer who wants to buy a propety approaches the bank for financing;
ii. The bank and customer enter into musharakah agreement to jointly purchase the property based on an agreed share depending on the amount of financing requested (for example 90:10);
iii. The deposit already paid by the customer will be deemed as his initial share contribution;
iv. The customer will rent the bank’s shares of the jointly acquired property through ijarah agreement; and
v. The installment by the customer will be used to buy the shares of the bank gradually until the entire bank’s share is owned by the customer.

A Shariah issue arising from the above transaction is the combination of musharakah and ijarah in one document of agreement. This combined transaction may be perceived as having two sales in one sale contract (bai`atain fi al-bai`ah) which is prohibited in Shariah.


p/s : Musharakah Mutanaqisah means a contract of partnership between financier and customer to own an asset in which one of the partners give the right to the other partner to buy his equity share of the asset either by one lump sum payment or several payments based on agreed conditions.

Example of a Musharakah Mutanaqisah Partnership (MMP) Financing question :

munif wishes to buy a house priced at rm500,000 and he is willing to pay 10% of the price as part of his capital.he is also willing to opt for the leasing.bank islam malaysia berhad (BIMB) agress to fund the 90%. remaining rm 450,000 and the current prevailing rent for similar houses in the locality is rm2500. munif want to buy back capital portion of the bank in 20 years.you are required to calculate the payments by using the computation of various components in MUSYARAKAH MUTANAQISAH FINANCING...

and the answer is....

v

v

v

v

v

v

v

STEP 1

STEP 2 :

DARI 0 SMPAI 240 KENA KIRA..

8 HELAI PAPER SEMUANYA

AND FINALLY :.....