In mudaraba, roles are divided: the capital owner contributes funds, while the manager contributes labor and expertise. Profit is divided in a predetermined proportion, and financial losses, if not caused by negligence or breach of conditions by the manager, fall on the capital owner.
A diligent manager loses invested effort but is not liable for losses from their own funds. This distribution distinguishes mudaraba from musharaka, where both parties contribute capital and losses are divided proportionally to their contributions.
The scheme operates in two directions. When financing a project, an organization provides capital while the client manages it. When attracting funds, roles reverse: the client places funds while the organization acts as manager and invests them in permitted operations.
The second variant forms the basis of Islamic investment accounts. Their key difference from regular deposits is that income is not guaranteed in advance—it depends on actual results, with only the distribution proportion fixed beforehand.