Analysis of Adoption of Mudarabah and Musharakah in Pakistan

The new concepts of Riba-free and Profit and Loss Sharing (PLS) have revolutionized the position of Islamic banks in the banking sector. The UAE and Malaysia and Indonesia and Pakistan nations are Islamic but they have Banks. Of these, Pakistan’s conventional and Islamic banks are the major participants. Islamic banks are at risk here because they cannot charge loan-based interest and are relatively small and inexperienced. Besides, a set of tools which are Islamic banking tools is very uncertain. Many products offer free banking to the public except where necessary under law. This research comparatively analyses the shift from Mudarabah to Musharakah and whether standardization is advantageous to Pakistani Islamic banking. In the following statutes, we took stock of Pakistani law preparation, adoption, implementation, and promulgation. This research paper only explored different types of Riba or interest-free banking systems in Pakistani Shariah Law. Does AAOIFI standardize Modaraba to Musharakah? The paper tries to solve this problem by saving AAOIFI from scattering in lots of versions by standardizing it. A majority of the existing literature and resources were used in the study with materials such as articles, journals, AAOIFI materials and websites. The paper proved that Musharakah may transform into Mudarabah where certain circumstances prevail. Such concepts coupled with the application of standardization in Pakistan enabled the banks to get rid of Riba, which can be interest rates, concerning the Islamic requirements.