MURABAHA Meaning and
Definition
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Murabaha is an Islamic finance term that refers to a type of sale transaction wherein the seller discloses both the cost price and an agreed-upon profit margin to the buyer. Essentially, it is a form of cost-plus financing in which the seller sells an item to the buyer at a price that includes the cost price and an agreed-upon profit. The transaction involves the buyer making a promise to purchase the item from the seller at an agreed-upon price, either upfront or through deferred payments.
In this financial arrangement, the seller acts as a provider of funds, purchasing the item on behalf of the buyer and then selling it to them at a profit. The buyer typically pays the total price in installments, either in fixed installments or with flexible repayment terms. The profit margin is determined upfront, ensuring transparency and compliance with Islamic principles, as interest-based transactions are prohibited.
Murabaha is commonly used in Islamic finance to facilitate asset purchases, such as homes, vehicles, and equipment, without resorting to conventional interest-based lending. It provides an alternative method for Muslims to acquire goods and access financing while adhering to Islamic principles. This type of transaction also promotes transparency, fairness, and shared risk between the buyer and the seller. Murabaha is widely accepted and practiced in Islamic banking and finance, offering a Sharia-compliant alternative to conventional financing options.
Common Misspellings for MURABAHA
- nurabaha
- kurabaha
- jurabaha
- myrabaha
- mhrabaha
- mjrabaha
- mirabaha
- m8rabaha
- m7rabaha
- mueabaha
- mudabaha
- mufabaha
- mutabaha
- mu5abaha
- mu4abaha
- murzbaha
- mursbaha
- murwbaha
- murqbaha
- muravaha
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