Contemporary Primary Sources :: Fatwās - Contemporary :: 2 Muḥarram 1435 / 4 November 2013
National Shari'a Board - Indonesian Council of Ulama Decree No. 1 of 2013 on Musyarakah Mutanaqishah Financing
Dewan Syari'ah Nasional MUI, Posted by Daniel Peterson, 23 June 2016
This decree defines Musyarakah Mutanaqishah financing as a financing facility based on the principles of musyarakah, that is, a joint venture where the shari'a financial institution's capital is reduced as a result of making incremental commercial transfers to the customer. It notes that the special characteristics of Musyarakah Mutanaqishah are that:
- enterprise capital of both parties (shari'a financial institution and customer) is stipulated in portions;
- enterprise capital already stipulated may not be reduced for the term of the agreement;
- the shari'a financial institution agrees to transfer all portions in a commercial and incremental fashion to the customer;
- deposits made by the customer to the shari'a financial institution that are of the same value as portion units are to be treated as commercial portion unit transfers, while deposits that exceed that value are profits that become the property of the shari'a financial institution.
The decree also acknowledges that the purpose of Musyarakah Mutanaqishah financing is to provide a financing facility to individual and corporate clients to increase their capital and/or assets based on a profit-sharing model.