It stands for ba’i bithaman ajil; a contract of sale (ba’i) in which goods are sold on a deferred payment basis. An Islamic bank buys equipment or goods ordered by the client, and then sells them to the client for an agreed price inclusive of the bank’s mark-up (profit/ ribh). This sale is similar in some of its features to ba’i al-murabaha. However, unlike ba’i al-murabaha, ba’i bithaman ajil doesn’t require that the seller reveals the original acquisition price to the buyer.

Furthermore, murabaha transactions may be based on deferment of the price or on immediate payment of the price, while in ba’i bithaman ajil, the price payment is deferred to a future date. The price in ba’i bithaman ajil may be more or equal to the spot price. It may also be deferred wholly or partially, i.e., the sale may involve repayment of the whole price or a portion thereof at the agreed future date.

Ba’i bithaman ajil is an Arabic term that translates as sale with deferred payment (deferred price sale).