Murabaha is a particular kind of sales where the bank expressly mentions the cost it has incurred on purchase of the Asset(s) and sells it to a customer, by adding profit as per bank’s terms and tariffs.

It is a contract of promise to buy and to sell commodity, machinery, vehicle etc. on agreed profit added to the cost (mark-up). Murabaha transaction is treated as a cost-plus profit sale.

Features

• The price of goods and Bank’s profit on Murabaha Transaction should be fixed and known to both parties at the time of contract. The cost (all direct expenses in acquisition of goods such as invoice price, transportation, UC charges, marine /in transit insurance, sales tax etc.) and profit element of the selling price must be separately identified.
• ln kind exchange/transaction of items of gold, silver or currencies cannot be carried out in Murabaha.
• A Murabaha contract shall not be rolled over because the goods once sold by the bank become property of the customer, and, hence, cannot be resold to the same or other banks for the purpose of obtaining further financing.
• A customer in the contract are required to make a security deposit for Murabaha transaction.
• Coop bank shall deduct the amount of actual loss from the security deposit in case the customer does not fulfill his/her promise to purchase the asset/goods.
• Murabaha depicts the following characteristics.

• The bank buys goods for Murabaha sales from the vendor and pay for it.
• The bank enters in to the Murabaha contract with a customer and delivers the goods
• The customer pays the bank in lump sum or installment over the contract period.

Murabaha can be financed in the form of: –

• • Murabaha Term Financing,
  • Murabaha Revolving Financing Facility,
  • Murabaha import Letter of Credit Facility,
  • Murabaha Pre-Shipment Export Financing Facility,
  • Murabaha Post Shipment/Revolving Export Facility,
  • Murabaha import Letter of Credit Settlement Financing.

• Please contact Coopbank Islamic to get more detail information and advices