Al-Sadiq (A.
S) Institute of Islamic Banking, Finance & Takaful
MURABAHA
Presented By Jawaid Iqbal
Prepared by: Br. Ali Abbas Abidi
15 Rajub 1429, Saturday July 19, 2008
Murabaha - Definition
Murabaha is selling a commodity as per the
purchasing price with a defined and agreed profit
mark-up.
This mark-up may be a percentage of the selling
price or a lump sum. This transaction may be
concluded either without a prior promise to buy, in
which case is called an ordinary Murabaha, or with
a prior promise to buy submitted by a person
interested in acquiring goods through the institution,
in which case it is called a “banking Murabaha” i.e.
Murabaha to the purchase orderer.
Shari’a Standard No. (8) – Murabaha to the purchase Orderer: Accounting and
Auditing Organization for Islamic Financial Institutions)
Murabaha Transactions
at the
Asset Side
of Islamic Banks
Deposit Bases :Musharika
Mudaraba
Wakala
Asset Side Islamic
Liability Side
Banking
Deposits from
Ijara Customers
Murabaha
Dimishing Musharika
Musharika MURABAHA
Mudarba Is always at
Asset side
Murabaha
Mode of Financing
Allah has permitted Trade and Prohibited RIBA
Banking Systems
Similarity
Conventional Banking Islamic Banking
(Lending) (Murabaha)
Client Client
Knows Knows
Goods
Loan Interest % Mark-up %
Cost
Islamic Bank &
Conventional Bank
For the Purpose
Of Murabaha & Lending
Interest is
Lending Changed
Is Changed with
with Goods mark up
Parties for Completing Murabaha Contract
As Sale As Mode of Finance
Seller Buyer Client Bank Supplier
Sale on the basis
Of Both
Spot and Deferred Deferred Sales
Morabaha Sale
Bai Mu’ajjal
Spot Deferred
Not emphasize in Through Bank Direct between
Standard Buyer and Seller
Rules covered in
Not covered in
Standard
Standard
Parties to
Murabaha Transaction
Parties for Murabaha Trasaction
Bank Client Supplier
Client Request to Bank
Bank Purchases Goods from Supplier
Bank Sells Goods to Client
No Agency Relationship between Client and Bank
Parties before Murabaha Transaction
Bank Supplier
(1) Payment
(2) Sales Goods
Parties for Murabaha Transaction
Bank Client Supplier
(1) Sales Goods
No
Relation
(2) Pays in Defer
Payment basis
Agency Relationship
Between
Client and Bank
(7) Pays on
defer basis
(5) Through Offer
and acceptance
Make Murabaha (6)Consume Goods
Bank Client Supplier
(1)Make Client
his agent (3)Purchases
Goods
(2) Makes bank as his
Principal
(4)Pay cost
Of Goods
When Bank makes his client as agent
Different Contracts
to Conclude
Murabaha
Contract
First Second
Actual Purchase Murabaha Contract
Bank and Supplier Bank and Client
When Client is not an Agent of Bank
When Client is an Agent of bank
Contract
Second
First Bank and
Third
Bank And Client Supplier Murabaha Contract
Bank and Client
Contract of Although
Agency Client Buys
But
Contract between Bank and Supplier
Contract of Murabaha mean
Offer Acceptance from
From Bank Client
OR
Offer Acceptance from
From Client Bank
Relationship
Between
Client and Bank
1….First Promisor and Promisee
2….Agent and Principal (In special Case)
3….Buyer and Seller
4….Last Debtor and Creditor
Relationship between Bank and Client
Before At the Time of
Murabaha After Murabaha
Murabaha
Bank Client Bank Client Bank Client
Promisee Promisor Seller Buyer Creditor Debtor
Client Before Bank
Agent Murabaha Principal
Before
Murabaha
When no Agency When Agency contract
Between Client and bank
Bank Client
Promisee Promisor
Bank Client Client
Bank
Promisee Promisor Agent
Principal
At the Time of Murabaha:
When Goods are with the Bank
Bank Client
Seller Buyer
Owns and Posses
Sales
Goods
At the Time of Murabaha: When Goods are with the Client
Bank-Seller Client-Buyer
Owns Goods
Client Possess Goods
On Behalf of Bank
Bank has Bank Sales
Constructive
Possession over
Goods
Constructive Possession of bank
After Murabaha
Bank Client
Creditor Debtor
(Receiver of Amount) (Payer of Amount)
Pays
Receives
Appointment
of
Client As Agent
When Bank appoints Client as Agent
Goods are of Bank unable to approach
Special in Nature To Supplier
Remember it is least preferred to appoint Client on Behalf
Of Bank to purchase the Goods
Subject Matter
and
Consideration
Contract of Murabaha
Subject Matter Consideration
Existing
Goods Cost + Markup
Fixed Asset and
Consumables are allowed
Commodity under Morabaha
Include Exclude
Gold
Silver
All goods except Same Currency
Expenses of Client
It is a view those who accept Currency alternate to Gold
Cost
Hidden Disclose to Customer
Musamawa Murabaha Tawlliyah Wazia
Profit on Sale
Hidden Disclose to Customer
Musamawa Murabaha
No Profit in Wazia
And Tawlia
Goods can only be sold on the price mentioned herein
Musamawah Murabaha Tawlliyah Wazia
Price Break Up
Musamawa Murabaha Tawlliyah Wazia
Cost + Cost + Cost + Cost -
Profit Profit Zero Profit Loss
Buyers Knows
Cost and Cost and Cost and
Profit Zero Profit Loss
Nothing
about
In In In
Cost and Profit Murabaha Tawlliyah Wazia
In
Musamawa
Contract of Sale On
Deferred
Spot OR Bai Mu’ajjal
If Seller discloses
Cost and Profit to Buyer
It is a
Murabaha
Price
Bai Spot
Deferred
Mu’ajjal
Musamawah Murabaha Tawlliayah Wazia
Deferment of Price
Musamawah Murabaha Tawlliyah Wazia
Standard no.8
Covers
Murabaha
In Detail
Not Covered in detailed in Standard No. 8
End of Part 1
