murabaha


murabaha
murabaha arrangements are commodity trading arrangements for financial institutions. The financial institution buys an asset from a supplier and then sells it to a customer at an agreed price that is higher than the purchase price. The sale price is fixed earlier between the financial institution and the customer and may be payable immediately or may be deferred for payment at a later date. The arrangement is not contrary to Sharia because by taking the title to the asset, the financial institution takes on a risk and is therefore entitled to a profit.
Related links
+ murabaha
International, USA
An Islamic finance technique used to provide working capital, trade financing and acquisition financing on terms compliant with Sharia. In a murabaha transaction, a lender buys an asset that has been identified by its client (the borrower) from a third party and then sells that asset to the borrower for the original purchase price plus a profit element (generally calculated based on a benchmark figure such as LIBOR). The borrower pays the new higher purchase price in installments.
In this structure, the:
• Lender does not make a loan but rather sells an asset at a mark-up.
• Profit element is specified and known in advance and is the difference between the price charged by the third party supplier and the price the lender charges for the asset.
• Borrower may pay the purchase in full, or more commonly, in installments.
Murabaha is the Islamic finance technique used most often in the US.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • Murabaha — (arabisch ‏مرابحة‎, DMG murābaḥa) ist ein im Islamischen Finanzwesen gebräuchliches Finanzierungsinstrument, das konform ist mit der Scharia. Hierbei agiert die Bank als Zwischenhändler zwischen Käufer und Verkäufer. Die Bank kauft im… …   Deutsch Wikipedia

  • Murabaha — Part of a series on Islamic jurisprudence (Fiqh) …   Wikipedia

  • Murabaha — An Islamic financing structure, where an intermediary buys a property with free and clear title to it. The intermediary and prospective buyer then agree upon a sale price (including an agreed upon profit for the intermediary) that can be made… …   Investment dictionary

  • Murabaha — Cost plus profit financing. The Murabaha technique is used extensively to facilitate the trade finance activities of Islamic financial institutions. The financial institution purchases and takes title to the necessary equipment or goods from a… …   Financial and business terms

  • murabaha — is., esk., Ar. murābaḥa 1) Bir malı çok fazla kârla satma 2) Tefecilik …   Çağatay Osmanlı Sözlük

  • MÜRABAHA — (Bak: Murabaha …   Yeni Lügat Türkçe Sözlük

  • murabaha — See: Islamic finance …   Accounting dictionary

  • murabaha — See Islamic finance …   Big dictionary of business and management

  • MURABAHA — Bir malı kâr ile satmak. * Bir miktar ilâve ederek ödünç para alıp vermek. * Fâiz ile para alıp vermek …   Yeni Lügat Türkçe Sözlük

  • murabaha — kanunun belirlediğinden fazla faiz alınması; tefecilik …   Hukuk Sözlüğü