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Bai-Murabaha
Bai-Murabaha may be defined as a contract between a Buyer and a Seller under which the Seller sells certain specific goods permissible under Islamic Shariah and the Law of the land to the Buyer at a cost plus agreed profit, payable in cash or in lump sum or by installments on any fixed future date. The profit marked-up may be fixed in lump sum or in percentage of the cost price of the goods.
It may be noted here that, in case of Bai-Muajjal and Bai-Murabaha, the Bank is a financier to the client not in the sense that the Bank finances the purchase of goods by the client, rather it is a financier by deferring the receipt of sale price of the goods sold by the Bank to the client.
If the Bank does not purchase the goods or does not make any purchase agreement with seller, but only makes payment of any goods directly purchased and received by the client from the seller under Bai-Muajjal / Bai-Murabaha Agreement, that will be a remittance of the amount on behalf of the client, which shall be nothing but a investment to him and any profit on this amount shall be nothing but Profit(Riba).
Different Types of Bai-Murabaha
Bai-Murabaha Commercial: Investment for purchase and sale of goods to individual or Firm or Company for trading purpose are termed as Bai-Murabaha Commercial.
Bai-Murabaha Industrial: Investment to Industrial undertaking in the form of supply of Machineries, Equipments, Raw Materials etc, are termed as Bai-Murabaha Industrial.
Bai-Murabaha Agricultural: Investment to agriculture sector for supply of seeds, fertilizer etc, are termed as Bai-Murabaha Agriculture.
Bai-Murabaha Import: Investment for Import of goods from abroad are termed as Bai-Murabaha Import.
Salient Features
Client may place an order to purchase a good by the Bank and committing to buy the same from the Bank.
It is a binding upon the Client to purchase the good.
It is permissible to take cash / collateral security to guarantee the implementation of the promise or to indemnify the damages.
Stock and availability of the goods is a basic condition. Bank must purchase the goods to acquire ownership.
After purchase the Bank must bear the risk of goods until delivered.
Bank must ensure delivery of the specified goods to the Client on specified date and at a specified place.
The Bank may sell the goods at a higher price than the purchase price to earn profit.
The price once fixed as per agreement and deferred cannot be further increased.
Agreed price will include cost price and profit. Bank must disclose the cost price and profit.
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