| Murabahah (Cost Plus)
Murabaha offers customers the convenience of acquiring assets for personal
or business use and paying for them over a period of time consistent with their
sources of income and their financial position. Under a Murabaha transaction
the Bank provides the customer with the money needed to purchase an asset for
personal or business use. The asset could be purchased domestically or abroad.
The customer, in coordination with the bank, negotiates the purchase price of
the asset with the seller. The bank purchases the asset from the seller then
sells it to the customer after adding an agreed profit amount and allowing the
customer the convenience of paying the full amount over a period of time in
installments.
A Murabaha L/C enables a business customer to buy goods, commodities, machinery,
or equipment from abroad. The customer submits commodity importation request
to the bank accompanies by foreign supplier price quotation. The bank issues
an import LC to the foreign supplier naming itself as the buyer. Upon arrival,
the bank sells the goods to the customer at a predetermined selling price based
on cost plus a pre-agreed profit.
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