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Murabahah sale in practice: procedure and issues in consumer and trade financing

In Murabahah financing practised by Islamic financial institutions, instead of extending a loan facility to the client for purchasing commodities required by him, the Islamic bank purchases the commodity from the supplier first and thereafter sells it to the client usually on deferred payment basis,...

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Main Author: Sadique, Muhammad Abdurrahman
Format: Conference or Workshop Item
Language:English
Published: Global Academic Excellence (GAE) 2017
Subjects:
HG1501 Banking
HG3368 Islamic Banking and Finance
KBP Islamic Law
KBP639 Muʻāmalāt
Online Access:http://irep.iium.edu.my/60210/27/60210-MURABAHAH%20SALE%20IN%20PRACTICE-Procedure.pdf
http://irep.iium.edu.my/60210/
https://www.facebook.com/events/473322066377534/
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spelling my.iium.irep.60210 http://irep.iium.edu.my/60210/ Murabahah sale in practice: procedure and issues in consumer and trade financing Sadique, Muhammad Abdurrahman HG1501 Banking HG3368 Islamic Banking and Finance KBP Islamic Law KBP639 Muʻāmalāt In Murabahah financing practised by Islamic financial institutions, instead of extending a loan facility to the client for purchasing commodities required by him, the Islamic bank purchases the commodity from the supplier first and thereafter sells it to the client usually on deferred payment basis, at an agreed fixed price comprising the cost incurred by the bank and an additional margin of profit. In the context of financing, Murabahah takes the form of a complex procedure comprising several transactions, reflecting several relationships between the parties involved. Being a mode of sale, all rules and conditions that are relevant to sale transactions remain applicable in Murabahah even when it is used for financing purposes. Murabahah is commonly used to finance the purchase of assets in a variety of forms, including financing consumer items as well as in trade financing, both through local purchase as well as import. A study of the procedural aspects of Murabahah would reveal that its proper implementation in a financing context is challenging. In order to overcome issues arising in Murabahah based financing, implementation of equity based modes such as Musharakah should be attempted where possible, such as in the context of trade financing. The current paper analyses important aspects involved in the application of Murabahah in the above areas, scrutinising practical aspects that are required to be carefully observed for the validity of the procedure in shari‘ah. Global Academic Excellence (GAE) 2017 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/60210/27/60210-MURABAHAH%20SALE%20IN%20PRACTICE-Procedure.pdf Sadique, Muhammad Abdurrahman (2017) Murabahah sale in practice: procedure and issues in consumer and trade financing. In: International Conference on Social Sciences, Humanities and Technology (ICSHT 2017), 2nd–3rd December 2017, Kelantan, Malaysia. https://www.facebook.com/events/473322066377534/
institution Universiti Islam Antarabangsa Malaysia
building IIUM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider International Islamic University Malaysia
content_source IIUM Repository (IREP)
url_provider http://irep.iium.edu.my/
language English
topic HG1501 Banking
HG3368 Islamic Banking and Finance
KBP Islamic Law
KBP639 Muʻāmalāt
spellingShingle HG1501 Banking
HG3368 Islamic Banking and Finance
KBP Islamic Law
KBP639 Muʻāmalāt
Sadique, Muhammad Abdurrahman
Murabahah sale in practice: procedure and issues in consumer and trade financing
description In Murabahah financing practised by Islamic financial institutions, instead of extending a loan facility to the client for purchasing commodities required by him, the Islamic bank purchases the commodity from the supplier first and thereafter sells it to the client usually on deferred payment basis, at an agreed fixed price comprising the cost incurred by the bank and an additional margin of profit. In the context of financing, Murabahah takes the form of a complex procedure comprising several transactions, reflecting several relationships between the parties involved. Being a mode of sale, all rules and conditions that are relevant to sale transactions remain applicable in Murabahah even when it is used for financing purposes. Murabahah is commonly used to finance the purchase of assets in a variety of forms, including financing consumer items as well as in trade financing, both through local purchase as well as import. A study of the procedural aspects of Murabahah would reveal that its proper implementation in a financing context is challenging. In order to overcome issues arising in Murabahah based financing, implementation of equity based modes such as Musharakah should be attempted where possible, such as in the context of trade financing. The current paper analyses important aspects involved in the application of Murabahah in the above areas, scrutinising practical aspects that are required to be carefully observed for the validity of the procedure in shari‘ah.
format Conference or Workshop Item
author Sadique, Muhammad Abdurrahman
author_facet Sadique, Muhammad Abdurrahman
author_sort Sadique, Muhammad Abdurrahman
title Murabahah sale in practice: procedure and issues in consumer and trade financing
title_short Murabahah sale in practice: procedure and issues in consumer and trade financing
title_full Murabahah sale in practice: procedure and issues in consumer and trade financing
title_fullStr Murabahah sale in practice: procedure and issues in consumer and trade financing
title_full_unstemmed Murabahah sale in practice: procedure and issues in consumer and trade financing
title_sort murabahah sale in practice: procedure and issues in consumer and trade financing
publisher Global Academic Excellence (GAE)
publishDate 2017
url http://irep.iium.edu.my/60210/27/60210-MURABAHAH%20SALE%20IN%20PRACTICE-Procedure.pdf
http://irep.iium.edu.my/60210/
https://www.facebook.com/events/473322066377534/
_version_ 1643616973313015808
score 13.211869

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