Murabaha offers customers the convenience of acquiring assets for personal or business use and paying for them over a period of time consistent with their sources of income and their financial position. Under a Murabaha transaction the Bank provides the customer with the money needed to purchase an asset for personal or business use. The asset could be purchased domestically or abroad. The customer, in coordination with the bank, negotiates the purchase price of the asset with the seller. The bank purchases the asset from the seller then sells it to the customer after adding an agreed profit amount and allowing the customer the convenience of paying the full amount over a period of time in installments.
A Murabaha L/C enables a business customer to buy goods, commodities, machinery, or equipment from abroad. The customer submits commodity importation request to the bank accompanies by foreign supplier price quotation. The bank issues an import LC to the foreign supplier naming itself as the buyer. Upon arrival, the bank sells the goods to the customer at a predetermined selling price based on cost plus a pre-agreed profit.