Islamic Business Model

Shirkat-ul-‘Aqd (Business Partnership) means an agreement between two or more parties to combine their assets, labour or liabilities for the purpose of making profits and bearing loss (if any).

The profit-sharing ratio will be pro-rata or any other ratio agreed at the time of contract.
Loss will be shared as per their proportionate sharing (If any).
In addition, profit realized more than the Desired Rate will be given to client as incentive.

DIFFERENCES BETWEEN ISLAMIC AND CONVENTIONAL REFINANCE PRODUCTS OF PMRC

CONVENTIONAL BUSINESS	ISLAMIC BUSINESS
Conventional Business just lends to its customer actually a loan contract.	Islamic Business purchases assets and create joint enterprise through Musharakah – Shirkah-tul- ‘Aqd.
Conventional Business has no Shariah Compliant assets in its ownership.	Islamic Business has Shariah Compliant assets through purchases of the existing mortgage assets portfolio.
Charge interest.	Islamic business earns profit through rental agreement.
No loss will be borne.	Islamic Business may suffer from loss according to the spirit of Musharakah – Shirkah-tul- ‘Aqd.
Conventional Business charges Interest as income.	Islamic Business earns profit from Musharakah Pool as per agreed profit-sharing mechanism.
Penalties may be charge for late payment as income.	Charity may be applicable for late payment for charitable purpose (note: not an income of PMRC).