Murabahah is the major financing product that can be used for financing to all sectors in the form of: working capital, purchase of goods/assets, Export and Import trade, project financing and so on.
Murabahah is a contract of sale between a customer and the Bank in which the Bank purchases the goods needed by a customer and sells the goods to the customer on a cost-plus basis. Both the profit (mark-up) and the time of payment (usually in installment) are specified in an initial contract. The Bank is the owner of the goods before it sells it to the customer. The bank may require collateral from the customers to secure the financing.
Among the services included in Murabahah are the following;
Murabahah Term Financing – For purchase of inputs, machinery or short-term project financing;
Murabahah Merchandise Facility – For purchase of merchandise for re-sale purpose;
Murabahah Revolving Financing Facility – for purchase of inputs with a working capital need of recurrent nature;
Murabahah L/C Financing – For purchase of inputs and machinery from abroad.
Murabahah pre-shipment and Murabahah Post-shipment Financing – For the purchase of goods to be exported.
Commodity Murabahah (Tawaruq) – for bulk purchase of commodity to alleviate working capital (cash) shortage of the customers;
Motor Vehicle Murabahah Financing – for purchase of motor vehicles for applicants in the transport sector as well as other business sectors;
Murabahah for purchase of building and Business Establishments – the Bank covers a portion of the purchase price of the building and/or Business Establishments and sale the same for eligible customers;
Murabahah Agricultural Input Financing – for purpose of purchasing and distribution of fertilizers, improved seeds and other agricultural farm inputs; and
Murabahah Commercial Farming Term Financing – for acquiring or constructing fixed assets such as buildings, agro-processing machinery and equipment for customers engaged in modern commercial farms or agro-processing industries.
