What is Murabaha financing?
It’s a contract of sale between the bank and its client for the sale of goods at a price plus an agreed profit margin for the bank.

The contract involves the purchase of goods by the bank which then sells them to the client at an agreed mark-up. Repayment is usually in instalments.

The bank purchases the commodity as per requisition of the client and sells him on cost-plus-profit basis. Under this arrangement, the bank is bound to disclose cost and profit margin to the client.  Therefore, the bank, rather than advancing money to a borrower, buys the goods from a third party and sells those goods to the customer on profit.

  • Customer identifies the product and the seller
  • Bank fixes the deal along with a profit
  • Customer then settle according to the settlement terms agreed with the Bank
  • Financing period varies from 90 days to 5 years
  • Financing: Raw material, Finished goods, Machinery, Equipment
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Shariah compliance
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The contract subject must be lawful.
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The purchase or resale must be real.
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The cost price, the Bank's profit margin and the payment periods must be known, fixed and accepted by both parties beforehand. (الإيجاب والقبول).

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