(a) As a first step, the Institute and the Client undertake to sell and buy a property in the future. This is not an actual sale. It`s just a promise to make a sale based on Murabahah in the future. At this point, the relationship between the institution and the client is one of a promise and a promise. refers to credit sales such as Murabaha, “forbidden usury” refers to the collection of extras for late payment (late fees), and the “they” refers to non-Muslims who did not understand why, if one were allowed, both were not:[27] Murabahah is the most widely used form of financing in almost all Islamic banks. In some Islamic banks, Murabaha accounts for more than 90% of the bank`s total assets. It has an obvious advantage that makes it very comparable to lending in conventional banking services. For this reason, Murabahah is becoming a method of financing that is even practiced by congressional banks. Contrary to what many people think, Murabahah is not new. This is a form of purchase contract known in Islamic Sharia law for hundreds of years, but not exactly the same as the current practice of banks. 7.
As already mentioned, the sale can only take place if the goods come into the possession of the seller, but the seller can promise to sell even if the goods are not in his possession. The same rule applies to Murabahah. The basic murabaha transaction is a cost-benefit purchase where the item the bank is buying is something the customer wants but has no money to buy directly at this point. [48] However, there are also other Murabaha transactions where the customer wants/needs money and the product/commodity the bank buys is a means to an end. (In doing so, it violates the demand made by Usmani and others.) Another pioneer, Mohammad Najatuallah Siddiqui, lamented that “due to the misappropriation of most of their funds in Murabaha, Islamic financial institutions may fail in their expected role of mobilizing resources for the development of the countries and communities they serve”[69] and even “create an identity crisis of the Islamic financial movement.” [70] [Note 6] Contract of sale between the bank and its customer for the sale of goods at a price plus an agreed profit margin for the bank. The contract includes the purchase of goods by the bank, which then sells them to the customer for an agreed surcharge. The refund is usually made in several instalments. In response to those who have doubts about the validity of Murabahah`s sales to buyers, we will point out the following: A – The sale of services through Murabahah, as provided for in the question, is not legal.
On the contrary, it is legal for the bank to conclude the transaction itself as an entrepreneur or to conclude a manufacturing contract (istisna), according to the Islamic banker Harris Irfan, this complication “has not convinced the majority of scholars that this series of transactions is valid in Sharia law”. [60] [Note 5] Since the purchase and sale of raw materials in Tawarruq did not have a functional purpose, banks/financiers are strongly tempted to do without it. Another source (Skrine Law Firm) distinguishes between Murabahah and Bay`bithaman `ajil (BBA) banking products and states that in BBA, disclosure of the cost price of the item to be financed is not a condition of the contract. [51] Murabahah is the old simple purchase agreement where a supplement is negotiated between the parties and calculated on the basis of the seller`s purchase costs. Nevertheless, Murabahah represents an interesting case of financial engineering in contemporary Islamic banking, where this simple purchase contract was developed into a substitute for loans owned by the bank. Since banks are not a “trader”, goods are assets that can be subject to murabahah that are not owned by the bank if the customer wants to buy them. One solution would be for the bank to first sell and then save the products from the market. However, this is not allowed from the point of view of Sharia law.
Islamic banks have decided to enter into a “purchase obligation” from the customer. It can be said that if such an obligation is binding, then it is a kinship with the purchase contract, and if it is a contract, it is not a value proposition. The customer is not obliged to buy, but to keep his promise. If the bank that relies on such a promise has purchased these goods and the customer decides not to proceed with the purchase, the bank will sell them to a third party. If a loss is made, the bank will resort to this customer, since the loss was caused by the promise. Only the actual loss is taken into account and no average cost is taken into account. A Murabahah is a deferred payment sale. 9.C is also a necessary condition for the validity of murabahah that the goods are purchased from a third party. The purchase of the goods by the customer himself under a buy-back agreement is not allowed under Sharia law. Therefore, Murabahah, which is based on a “buyout agreement, is nothing more than an interest-based transaction. THE MINISTER – This project is unacceptable because it involves the sale of gold on credit and beyond that does not indicate delivery. In these circumstances, other solutions should be considered by the Bank; including the creation of a public limited company with shares representing tangible assets, which allows shareholders to make profits from gold mining.
Bilal wants to buy a boat that sells for $100,000 at Billy`s Boat Shop. To do this, Bilal would contact a Murabaha bank that would buy the boat from Billy`s Boat Shop for $100,000 and sell it to Bilal for $109,000 to pay for it in installments over a three-year period. The amount Bilal pays is a fixed amount to a bank that owns the asset, and there are no interest charges. If Bilal defaults, there will be no additional costs it incurs. The additional amount that Bilal pays on the cost price of the boat shop is indeed a 3% loan, but since it is offered as a fixed payment at no additional cost, it is allowed by Islamic law. (Usmani and other Islamic finance specialists[8],[35] agree that the inability to punish a lender/buyer for late payments has led to late payments in Murâbaḥah and other Islamic financial transactions.
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