It is a mode of investment under which the Bank as per contract and request of the client procures certain goods permissible under Islamic Shari’ah from a third party and sells those to the client at a cost plus declared profit payable along with principal amount by cash in any future fixed date in lump sum or by installment

Murabaha is one of the fundamental contracts in Islamic Finance and symbolizes the essence of Islamic Financial Industry which endorses trade over monetary lending. This contract, being based on the concept of trade or sale at cost plus profit,

Key Features

• The Client shall place an order to the Bank to purchase goods mentioning its specification and committing himself to buy the same from the Bank on Murabaha (cost plus on agreed profit)
• The Bank should purchase the goods as per specification of the Client to acquire ownership of the same before signing the Bai Murabaha agreement with the Client
• A commodity in the true sense must be involved in buying & selling
• The Bank sell the goods at a higher price (Cost + Profit) to earn profit. The cost of goods sold and profit mark-up therewith shall separately and clearly be mentioned in the Bai- Murabaha Agreement.

The Client is bound to purchase the specific goods from the Bank; else client should indemnify the damages caused by breaking the promise without excuse.