MURABAHA - Trade Finance ………… On a Straight Path
Murabaha - the concept:
A contract of sale between a customer and Dawood Islamic Bank Ltd. (“DIBL”) under which DIBL first purchases the goods (permissible under Shari’ah) at the request of the customer and then sells these goods to the same customer after adding profit. The Murabaha Sale Price includes all acquisition costs borne by DIBL and a mutually agreed profit.
Murabaha Transaction at a glance:
- Request from the customer to DIBL for the purchases of specific local / imported goods.
- Appointment of customer as agent of DIBL.
- DIBL purchases the goods upon request of the customer and takes ownership, thus transforming its money into goods.
- After purchase of goods the risk of the goods is borne by DIBL until the ownership of the goods is transferred to the customer by way of offer and acceptance. At the same time, specification of the goods, delivery, place and other terms of the contract are ensured.
DIBL’s Murabaha Financing is available for local and foreign purchases of:
- Raw Materials
- Commodities
- Equipments/Machinery
- Other tangible assets
Types of Murabaha:
- Spot Payment Murabaha
- Immediate repayment in cash against Letters of Credit (Sight)
- Deferred Payment Murabaha Repayment on mutually agreed future date
All agreements/documents are approved by DIBLs Shari’ah Advisor.
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