What Is Musharaka?

Musharikah is a business relationship established under a contract by the mutual consent of the parties for sharing the profit and loss arising from a joint enterprise or venture.musharika is an arrangement in which the parties contribute their money ,or efforts or skills or combination of all these components.
NAJIB ULLAH WARDAK

Musharaka refers  to profit and loss sharing between  the lender and the borrower  completely  doing always  with the interest. It is an arrangement of financing in which parties offer funds, efforts, or/and skills. Profits are share among them according  to the rate investor. In Pakistan, the musharaka Financing mode has be launched by commercial banks to meet their working capital  requirement  of the trade  and industry . The Bank carry out musharaka functions out of profit  and loss  accounts (PLS) deposits. Borrower receive interest –free loans on the basis of equity  participation and profit or loss from the bank or any other financial  institution .    The lending  bank enjoys the right of participation  in the borrowers business to the limit of amount  of loan.  In other words, the borrower is liable to the bank (the lender) up to the limit of the invested (i.e. Borrowed )amount . In case of profit (or loss) the lender will receive  his prorate share or profit( or suffer a loss). The agreement between the investor  and the company is referred  to as muharaka investment agreement which stipulates  that the operation of the musharaka will be carried  out by the borrowing company. The bank as  a trustee will watch, evaluate, and supervise the performance.

Musharaka is a system in which two parties join their capitals and do a business which is based on profit loss system. It is interest free . Both parties will share profit or loss according to their share in investement.