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Murabaha Finance

This service enables our commercial customers acquire to a range of commodities and goods by way of Murabaha pursuant to which the Bank provides most of customer needs through the following steps:

  • The customer applies to the Bank requesting a certain commodity of specified details and price with a promise to purchase such commodity from the Bank at an agreed mark up. In turn, the Bank promises the customer to sell the commodity to it on the terms mutually agreed.
  • After the commodity is purchased and possessed by the Bank, it resold to the customer at deferred price basis payable in one stroke or by installments, while the customer has the right to either accept or decline to buy the subject commodity. The Bank may use more than one method to settle the purchase transaction of the subject commodity including documentary collection, bank draft, direct transfer to the seller, or letter of credit.

Sharia Controls of Murabaha Sale Contract

  • The price of the commodity and the amount of the seller's profit must be known to the parties, seller and buyer.
  • The seller is responsible for any damage to the commodity before delivery to the buyer.
  • The buyer may return the commodity if it proves to have an invisible defect.
  • The seller must possess and own the commodity before reselling it to the buyer.
  • The commodity must be defined and described.
  • Agreement and acceptance should be clearly reflected in the contract.

Scope of Murabaha applications

  • Financing of purchasing commodities and goods from the local markets
  • Financing import and export transactions
  • Financing fix assets (machines and equipments)
  • Financing of working capital (purchasing feedstock used for production)
  • Financing construction and installations material purchases
  • Financing purchasing of real estate (land and building)
  • Settlement of bank share interests with its customers