chap 08 - murabaha
TRANSCRIPT
7/23/2019 Chap 08 - Murabaha
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Islamic Financial
Products and Processes
Ameenullah Sheikh
7/23/2019 Chap 08 - Murabaha
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Trade Financing/Comodit
Financing
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• Islam prohibits charging fixed interest on money,
but permits charging fixed profit on sale of goods.
This clears a common misconception that charging
fixed profit is haram.
Murabaha
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Presen
Murabaha
• Murabaha is a particular kind of sale wherethe transaction is done on a “cost plus profit”basis i.e. the seller discloses the cost to thebuyer and adds a certain profit to it to arrie
at the final selling price.
• The distinguishing feature of Murabaha fromordinary sale is!
" The seller discloses the cost to the buyer." #nd a known profit is added.
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Conditions of Subject Matter :
$% &ub'ect Matter of murabaha must be existing at the time of sale.
(% &ub'ect Matter of murabaha must
be in the ownership of the seller.
)% &ub'ect Matter of murabaha must be inthe physical or constructie possession of the seller. *Transferof +isk +eward and permission of use- Tasrruf are basicingredients of onstructie /ossession
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Conditions of Subject Matter :4) &ub'ect Matter of sale must be of a proper
alue
0% &ub'ect Matter of murabaha should notbe a thing which is not used except fora 1aram /urpose.
2% &ub'ect Matter of Murabaha must be&pecified Identified to the buyer.
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PRICE OF MURABAHA:PRICE OF MURABAHA:
$% The price must be fixed in Murabaha
*lump sum-by percentage%
(% The price in Murabaha may be spotor deferred.
)% If the price is deferred in Murabaha,the installments and due date mustbe determined.
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4) 3hen once the price is fixed it can not be
changed.
0% Increase in the price not allowed incase of default.
2% 4luctuation in Murabaha price is not permissible.
PRICE OF MURABAHA:PRICE OF MURABAHA:
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Expenses ofExpenses ofMurabaha:Murabaha: The direct
expenses will beadded in the costof goods. (Costacquiring the
commodity likefreight andcostume duty)
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• It is a contract wherein the institution, upon re5uest by thecustomer, purchases an asset from the third party*a supplier%and resells the same to the customer either againstimmediate payment or on a deferred payment basis.
• It is a bunch of contracts completed in steps and ultimatelysuffices the financial needs of the client.
• The se5uence of their execution is extremely important tomake the transaction &hariah compliant.
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$. lient and bank sign an agreement to enterinto Murabaha *MM4#%.
greement to!urabaha
Bank Client
Steps in Murabaha financing
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Presen
(. lient is appointed as agent to purchasegoods on bank6s behalf
greement to!urabaha
Bank Client
Steps in Murabaha financing
gency
greement
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). 7ank gies money to agent-supplier forpurchase of goods.
"isbursement to the agent orsupplier
gency
greement
Supplier
greement to!urabaha
Bank Client
Steps in Murabaha financing
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8. The agent takes possession of goods on bank6sbehalf.
Transfer of#isk
"eli$eryof goodsendor
Bank !gent
Steps in Murabaha financing
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0*a%. lient makes an offer to purchase thegoods from bank through a declaration.
%&er topurchase
Bank
Clien
t
Steps in Murabaha financing
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0*b%. 7ank accepts the offer and sale isconcluded.
!urabahagreement '
Transfer of Title
Bank
Client
Steps in Murabaha financing
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2. lient pays agreed price to bank according toan agreed schedule. 9sually on a deferred
payment basis *7ai Mua''al%
ayment of rice
Bank
Client
Steps in Murabaha financing
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Any Questions??THANK YOU