Diminishing Musharaka

This allows equity participation and sharing of profits on a pro-rata basis. It provides a mode through which the Modaraba keeps on reducing its equity in the project, ultimately transferring ownership of the asset to the participants. The contract provides for re-payment of the Modaraba‘s investment and its shares in purchase of the asset. Simultaneously the entrepreneur purchases the Modaraba’s equity, progressively reducing it until the Modaraba has no equity and thus ceases to be a partner.