The term ‘Bai-Murabaha’ has been derived from Arabic words ﻊﻴﺒ and ﺢﺑﺭ (Bai’un and Ribhun). The word ﻊﻴﺒ means purchase and sale and the word ﺢﺑﺭ means an agreed upon profit. ﺍﻠﻤﺮﺍﺒﺢ ﻊﻴﺒ ‘Bai-Murabaha’ means sale on agreed upon profit.
Bai-Murabaha may be defined as a contract between a buyer and a seller under
which the seller sells certain specific goods (permissible under Islamic Shariah and
the Law of the land), to the buyer at a cost plus agreed profit payable in cash or
on any fixed future date in lump-sum or by installments. The profit marked-up may
be fixed in lump-sum or in percentage of the cost price of the goods.
- Profit is shared as per agreement.
- Loss beared by client.
- Amount can be paid on installment basis.
- Usual duration 1-2 year(s).
- Rebate may be given on Early Adjustment.
It is permissible for the Client to offer an order to purchase by the Bank
particular goods deciding its specification and committing himself to buy
the same from the Bank on Murabaha, i.e. cost plus agreed upon profit.
It is permissible to make the promise binding upon the Client to purchase
from the Bank, that is, he is to either satisfy the promise or to indemnify
the damages caused by breaking the promise without excuse.
It is permissible to take cash/collateral security to guarantee the
implementation of the promise or to indemnify the damages.
It is also permissible to document the debt resulting from Bai-Murabaha by
a Guarantor, or a mortgage, or both like any other debt. Mortgage /
Guarantee/ Cash Security may be obtained prior to the signing of the
Agreement or at the time of signing the Agreement..
Stock and availability of goods is a basic condition for signing a
Bai-Murabaha Agreement. Therefore, the Bank must purchase the goods as per
specification of the Client to acquire ownership of the same before signing
the Bai-Murabaha agreement with the Client.
After purchase of goods the Bank must bear the risk of goods until those are
actually sold and delivered to the Client, i.e., after purchase of the
goods by the Bank and before selling of those on Bai-Murabaha to the Client
buyer, the Bank shall bear the consequences of any damages or defects,
unless there is an agreement with the Client releasing the Bank of the
defects, that means, if the goods are damaged, Bank is liable, if the
goods are defective, (a defect that is not included in the release) the
Bank bears the responsibility.
The Bank must deliver the specified Goods to the Client on specified date
and at specified place of delivery as per Contract.
- The Bank shall sell the goods at a higher price (Cost + Profit) to earn
profit. The cost of goods sold and profit mark-up therewith shall separately and clearly be mentioned in the Bai-Murabaha Agreement. The profit mark-up
may be mentioned in lump sum or in percentage of the purchase/cost price of
the goods. But, under no circumstances, the percentage of the profit shall
have any relation with time or expressed in relation with time, such as per
month, per annum etc.
The price once fixed as per agreement and deferred cannot be further
It is permissible for the Bank to authorize any third party to buy and
receive the goods on Bank's behalf. The authorization must be in a separate
For more information please contact to your nearest branch.