Murabaha by Muftti Najeeb Khan

Top 20 FREQUENT WORDS

murabaha 48 stage 27 client 24 sale 20 agreement 17 agency 16 customer 16 goods 16 institution 16 purchase 15 possession 12 execution 11 price 11 contract 10 payment 10 financing 9 seller 8 supplier 8 title 8 credit 7 facility 7 risk 7 stages 7

DOCUMENT KEY POINTS

sale contract murabaha
muhammad najeeb khan

law of contract i islamic contract it is connection between the offer and the acceptance in a manner that results the proper affects
i offer i acceptance i subject matter

islamic sale i definition of sale bai a exchange of a thing of value with another thing of value with mutual consent
a the sale of a commodity in exchange of cash

murabaha i murabaha is a particular kind of sale where the seller discloses its cost and profit charged thereon
i the price in this sale can be both on spot and deferred

a c musawima is a sale on agreed price without referring to the first price on which the seller has purchased
difference between murabaha musawima a c murabaha is a particular kind of sale where the seller discloses its cost and profit charged thereon

i it is a bunch of contracts completed in steps and ultimately suffices the financial needs of the client

scope of murabaha i as it is a kind of sale there must be a seller and buyer and some thing that is bought and sold
i it cannot be used as a substitute for running finance facility which provides cash for fulfilling various needs of the client

i the transaction can be used in order to meet the working capital requirements however it cannot be used to meet liquidity requirements
scope of murabaha i it is a fixed price sale and normally is done for short term

client approach the bank for facility through murabaha
promise stage stage one a for murabaha financing

client and bank sign an agreement to enter into murabaha
promise stage stage one b for murabaha financing

bank client purchase requisition promise to the bank
promise stage stage one c for murabaha financing

client appointed as agent to purchase goods on bank s behalf bank client agreement to murabaha agency agreement
agency stage

islamic agreement to bank bank murabaha client agency agreement disbursement to the supplier
agency stage stage two for murabaha financing

client purchases goods and takes transfer of risk vendor possession bank client
acquiring possession stage three for murabaha financing

client makes an offer to purchase the goods from bank
execution of murabaha stage four a for murabaha financing

execution of murabaha stage four b for murabaha financing
bank accepts the offer and sale is concluded

client pays agreed price to bank according to an agreed schedule
usually on a deferred payment basis bai muajjal payment of price bank client

after execution of murabaha
agency stage i

credit approval under shariah perspective points to be considered while approving credit i the institution must insure that the party from whom the item is bought is a third party and not the customer or his agent
in this manner the transaction can be saved from bai inah buy back which is not allowed in sharia

murabaha facility agreement mou i mentioning limits of each facility i security to be submitted by the customer i other terms and conditions covering all the facilities approved for the customer
i the agreement to be signed by both the parties

i containing the details of the goods required to purchase from the supplier cost price and expected date of delivery i the prerequisite is that the goods are not already owned by the client
cpurchase requisition i the client orders the institution to buy certain goods for him and sell him the same after acquiring

dpromise to purchase i at this stage the customer promises the institution to buy the goods which were acquired by the institute on his request
i normally purchase requisition contains this promise

i it is advisable that murabaha payment to be made directly to the supplier by the bank
gpayment of murabaha goods i advance payment can be made to the supplier

agency stage i agency agreement is not the condition of the murabaha if the institution can make direct purchases from the supplier
i the financial institution does not have the expertise to identify the goods and negotiate an efficient price

i the institution therefore appoints him as its agent which is also permissible in the first step of the transaction to identify and procure the goods on institution behalf
agency stage i the customer however being in the industry can do this

agency stage i this is done by execution of agency agreement between the institution and the customer
i however according to sharia perspective it is preferable to appoint the agent other then customer

specific agency agreement when the purchase of commodity is not of consistent nature
agency stage types of agency agreement

i the forms of taking delivery or possession of items differ according to their nature and custo miss i the item must move from the responsibility of the supplier to the responsibility of the institution
i it is obligatory that the point when the risk of the item is passed on by the institution to the customer be clearly identified

i if the above two are not fulfilled than the institution cannot execute murabaha

physical inspection i importance of physical inspection
i it is advisable that bank should appoint one person for physical inspection

offer to purchase i the customer will make an offer to purchase the goods acquired by him for bank s behalf mentioning the offer price
comprising cost plus bank s profit

all the terms of the murabaha transaction such as sale price cost plus profit due date or schedule of payments etc
bank s acceptance i the bank will accept the offer made by the customer

i since the sale is effected on deferred payment basis the relation of debtor and creditor also emerges between them simultaneously
relationship i at this stage relation of a buyer seller comes into operation between the institution the client

rollover in murabaha i rescheduling is allowed but repricing is not allowed
i rollover is also not allowed

Please note, This is an auto generated summary based on sentances position in the document and other factors

DOCUMENT WORD ANALYSIS

Main Category

AlHuda Material\islamic banking

KeyWords

contract price sale asset financing lease client purchase ijarah payment profit musharakah lessee amount commodity housing agreement contracts ownership project

DOCUMENT REFERENCES

Number of Pages

59

Published Date

2016-09-17 00:27:24

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Murabaha by Muftti Najeeb Khan

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Top 20 FREQUENT WORDS

DOCUMENT KEY POINTS

DOCUMENT WORD ANALYSIS

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KeyWords

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