Basic Rules Governing Murabaha

Murabaha Transaction may be undertaken only where the Client of Financial Institution wants to purchase tangible goods i.e. financing is always commodity based. This type of transaction cannot be affected in cases where the Client wants to get funds for a purpose other than purchasing goods.

Subject of sale must exist at the time of sale.

Goods must be purchased from a third party; therefore, Products already in the ownership of the Client cannot be financed.

Sale must be absolute. Thus a sale attributed to a future date or a sale contingent on a future event is void.

Delivery of goods to the Client must be certain and should not depend on contingency or chance.

Murabaha sale price once fixed cannot be altered. Rollover of Liabilities is not permissible under Shariah. Similarly goods cannot be repurchased against which Murabaha already allowed / adjusted.