Use of fake Murabaha by Islamic banks for financing and earning disguised interest? � Islamic Bank
- Dec 3, 2008 at 4:20 PM
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Normal sale is based on price known in advance. If price is unknown, sale is, of necessity, based on profit payable together with the expenses to be incurred by the seller in procurement. Upon taking delivery, the buyer pays in cash. Sharia permits such cash sale naming it Bai Murabaha as it is based on profit. Logically genuine Murabaha sale is negotiated only when the price is not known. If in a credit sale transaction the buyer is charged more than the price at which he can buy what he needs against cash payment, then such a sale is fake Murabaha and mark-up on the price is interest.
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