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  • Murabaha: BY Muhammad Sheharyar

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    Bilal Awan
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    Murabaha is an Islamic financing structure that involves a cost-plus sale where a seller provides a commodity to a buyer at a pre-agreed markup over the seller's cost. It is used as an alternative to interest-bearing loans which are prohibited under Islamic law. Through a murabaha transaction, a bank will purchase an asset for a customer and sell it to them at a higher price paid over installments, allowing consumers to acquire goods like homes, cars or appliances in a Sharia-compliant way. For example, a bank could buy a boat for $100,000 and sell it to Bilal for $109,000 to be paid back over three years.

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    Murabaha is an Islamic financing structure that involves a cost-plus sale where a seller provides a commodity to a buyer at a pre-agreed markup over the seller's cost. It is used as an alternative to interest-bearing loans which are prohibited under Islamic law. Through a murabaha transaction, a bank will purchase an asset for a customer and sell it to them at a higher price paid over installments, allowing consumers to acquire goods like homes, cars or appliances in a Sharia-compliant way. For example, a bank could buy a boat for $100,000 and sell it to Bilal for $109,000 to be paid back over three years.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    10 views8 pages

    Murabaha: BY Muhammad Sheharyar

    Uploaded by

    Bilal Awan
    Murabaha is an Islamic financing structure that involves a cost-plus sale where a seller provides a commodity to a buyer at a pre-agreed markup over the seller's cost. It is used as an alternative to interest-bearing loans which are prohibited under Islamic law. Through a murabaha transaction, a bank will purchase an asset for a customer and sell it to them at a higher price paid over installments, allowing consumers to acquire goods like homes, cars or appliances in a Sharia-compliant way. For example, a bank could buy a boat for $100,000 and sell it to Bilal for $109,000 to be paid back over three years.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 8

    MURABAHA

    BY
    MUHAMMAD SHEHARYAR
    DEFINE MURABAHA

    • “Murabahah” is, in fact, a term of Islamic Fiqh and it refers to a


    particular kind of sale having nothing to do with financing in its
    original sense. If a seller agrees with his purchaser to provide him
    a specific commodity on a certain profit added to his cost, it is
    called a murabahah transaction.
    KEY POINTS

    • Interest-bearing loans are prohibited


    under Islam’s Sharia law.

    • In Islamic finance, murabaha


    financing is used in place of loans.
    • Murabaha is also referred to as cost-plus financing because it
    includes a profit markup in the transaction rather than
    interest.

    • A seller and buyer agree to the cost and the markup, which
    are then paid in installments.
    USE OF MURABAHA

    • The murabaha form of financing is typically used in place of loans


    in diverse sectors. For example, consumers use murabaha when
    purchasing household appliances, cars, or real estate. 
    EXAMPLE OF MURABAHA

    • Example of Murabaha
    • Bilal would like to buy a boat that sells for $100,000 from Billy's Boat Shop.
    To do so, Bilal would contact a murabaha bank, that would buy the boat from
    Billy's Boat Shop for $100,000 and sell it to Bilal for $109,000, to be paid in
    installments over a three year period.

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