Murabahah Financing

amount paid by the orderer (customer) upon a request from the bank to make sure that the orderer is serious in his demand for the asset

If the contract is binding

If contract is not binding

an amount of money paid in advance to the bank

if conculededthe urboun will be retained by the bank

if the customer concludes the deal and takes the asset, the urboun will be treated as part of the price paid in advance,

Lower of

not to over-value

cash equivalent value

reflect current value

protect bank/financier

To provide provision(decline between cost and CEV)

based on proportionate of profit

every end of the years

regardless cash received or not

only when cash is received

required the approval of SSB

1. The Islamic bank buys the goods for Murabahah sale from the vendor and pays for the goods.

2.The vendor delivers the goods to the Islamic bank.

3.The Islamic bank enters into a Murabahah contract with customer and delivers the goods

4.The customer pays the goods (Price= Cost + Pre-determined mark-up) to Islamic Bank.

Two parties involved

1.The customer orders the Islamic bank to purchase goods, which it promises to buy from the Islamic bank giving it some profit.

2.The Islamic bank buys and pays for the goods from the vendor.

3.The vendor delivers the goods to the Islamic bank.

4.The Islamic bank executes a Murabahah contract of sale with the customer and delivers the goods.

5.The customer pays for the goods on an instalments basis to the Islamic bank.

Three parties involved