The Structure and Required Elements of a Murabaha Transaction
Type
Practical Guidance
Document type
Practice Note
Date
7 Jan 2022
Jurisdiction
Kuwait
Taxonomy
Islamic Finance
Copyright
LexisNexis
Overview
Murabaha is both one of the most widely used and controversial Islamic finance techniques. Murabaha (often referred to as “cost plus profit financing”) involves a minimum of three contract parties and lends itself readily in trade finance and consumer finance to fund the acquisition of assets. However, the murabaha may also be (and often is) used to meet corporate working capital needs, fund acquisitions (e.g., of land or shares) and can serve as the basis for a deposit product.