The Structure and Required Elements of a Murabaha Transaction

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.