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Islamic Finance

  Islamic Finance   |   Terms
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  • January 23, 2023
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Commitment Cash Margin

It stands for the Arabic term arbun/arboon/urboun (عربون). It is the amount of money which is paid by a potential buyer to the seller, particularly in murabaha contracts (murabaha to the purchase orderer), against the purchase of a specific asset. If the buyer proceeds with the sale and collects the asset, then this money will be considered part of the price. The buyer will be required to pay only the remaining amount in order to take that asset into his possession and ownership. However, if the buyer chooses not to conclude the sale, the urboun will belong to the seller.

The commitment cash margin is also known as earnest money or down payment.


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