Murabaha
Murabaha is a financing arrangement in which POICL-IFD purchases an asset and sells it to the customer at a higher price, including a disclosed profit. The customer can repay in installments or in a lump sum, and the price is agreed upon at the time of sale.
It is not a loan; it is a trade-based transaction. POICL-IFD must own and possess the goods before selling them to the customer. The customer's payment can be deferred, but the sale price becomes fixed and cannot be increased due to delay or default.
Core Shariah Requirements
- POICL-IFD must own and possess the asset before selling it to the customer.
- Cost price and profit margin must be clearly disclosed to the customer.
- Asset must be identified and specified at the time of sale.
- Sale price must be fixed and agreed in advance; no uncertainty allowed.
- Asset must be Shariah-compliant in nature and use.
- Purchase must be based on a genuine underlying asset, not cash financing.
- Payment can be made on the spot or deferred as agreed in the contract.
- Risk of ownership remains with POICL-IFD until transfer to the buyer is completed.
