Professional Documents
Culture Documents
Murabaha
Definition of Murabaha
•Existence •Quantified
•Offer/Acceptance •Physical
•Ownership •Certain
Buyer/Seller
•Possession •Constructive
•Valuable
•Specific
•Halal Purpose
•Delivery
Features of Murabaha
Model - II
Three party relationship
• (Bank-vendor) and customer
Model - III
Three party relationship
• Bank and (vendor-customer)
Model - I
• The simplest possible model emerges when the
transaction involves two parties only, i.e. Bank and the
customer.
Customer 1 Bank/Vendor
3
Model I - Phases
Phase 1:
The customer approaches Bank (Vendor) and
identifies Asset(s) and collects relevant information
including cost and profit.
Phase 2:
Bank sells Asset(s) to the Customer, transfer risk and
ownership to the Customer at certain Murabaha
Price.
Phase 3:
Customer pays Murabaha Price in lump sum or in
installments on agreed dates.
Model - II
• In most cases Murabaha transaction involves a
third party (i.e. Vendor) because bank is not
expected to engage in sale of variety of products
required for variety of customers.
1 Vendor 3
4
5
Customer 2 Bank
6
Model II - Phases
Phase 1:
Customer identifies and approaches the Vendor
or Supplier of the Asset(s) and collects all relevant
information.
Phase 2:
Customer approaches the Bank for Murabaha
Financing and promises to buy the Asset(s).
Phase 3:
The Bank makes payment to vendor directly.
Model II – Phases
Phase 4:
Vendor delivers the Asset(s) & transfers the
ownership of Asset(s) to the Bank.
Phase 5:
Bank sells the Asset(s) to Customer on cost
plus basis and transfers ownership.
Phase 6:
Customer pays Murabaha Price in lump
sum or in installments on agreed dates.
Model III – Banking Murabaha
3
Vendor
4
5
Customer 2 Bank
6
Offer Acceptance
1
7
Phase I – Promise to Purchase and Sell
• The customer approaches the bank for Murabaha
Finance and promises to purchase the asset(s)
from the bank which, the customer will purchase as
an agent of the bank.
a. Types (global/specific)
i. Lump-sum payment
Murabaha
Import Export
Murabaha Murabaha
Pre-shipment Post-shipment
Use of Murabaha in Imports
cost of goods.
Rollover in Murabaha