AL MURABAHAH (Sale and Purchase Payments in Accordance with Islamic Shari’ah)

Blog entry

Al Murabaha is the sale of goods at the original price agreed upon with the additional benefits provided must notify the seller that he bought the product price and determine a level of profit (margin) as enhancements. In the transactions mentioned conditions must be met as follows:

1. The seller told the cost of capital to the customer;
2. The first contract must be valid in accordance with the harmony that has been established;
3. The contract must be free from riba (interest);
4. The seller must explain to the buyer if there is defect in the goods after purchase;
5. The seller must deliver all the matters related to the purchase.

Applications mentioned in Islamic Financial Institutions is to finance the purchase of investment goods. Al Murabaha is a contract for one contract (one short deal), so it is less precise when used to finance working capital.

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