| Musawamah
Musawamah is somewhat similar to Murabaha financing. It offers the customer
the convenience of acquiring an assets when needed and paying the purchase price
plus profit in installments over a period of time.
In a Musawamah transaction the customer requests the bank to purchase certain
asset or commodity from a third party. The price of the commodity is usually
unknown to the customer. Upon acquiring the commodity, the bank adds its profit
amount and offers to sell it to the customer who has the right to accept, refuse,
or negotiate the price. If accepted, the customer repays the total amount to
the bank in agreed installments. Musawamah is usually provided to finance local
purchases including vehicles, real estate, home appliances, machinery and equipment.
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