A sale contract that is used by Islamic banks and financial institutions acting as intermediaries in order to provide finance to customers seeking to purchase commodities on a cost-plus basis. Financiers typically charge a mark-up on the original purchase price and agree to receive the new price from the buyer over a period of time in the future. This transaction is a present-day innovation in Islamic finance as practiced by Islamic banks.
It is a further development of the traditional notion of ba’i al-murabaha in which the transaction is settled in cash at the trade date.
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