Structure of a Murabaha Transaction (English/Arabic)

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Overview

  • Murabaha is one of the most prevalent contracts in the Islamic finance industry and accounts for approximately 75% of the financial operations of some Islamic banks.

  • This Practice Note provides a high-level overview on the prevalent structure of Murabaha in the Middle East region.

Definitions

  • Murabaha: A sale contract where a customer approaches an Islamic bank for financing the purchase of specific goods required by the customer. It is also called cost-plus financing.

Practical Guidance