Search
Generic filters
Filter by Categories
Accounting
Banking

Islamic Finance




Commodity Murabaha


A murabaha-based, short-term placement operation that involves the the purchase and sale of commodities in the international exchanges. Islamic banks and financial institutions seek commodity murabaha for liquidity management purposes. This liquidity management tool typically capitalizes on tawarruq (Islamic monetization) by appointing a broker to buy a specific metal against cash payment and then sell it on deferred payment terms to a third-party broker on the same purchase date.

This mode of short-term financing has not been approved by all scholars as it constitutes fictitious transactions that are not meant by themselves, but rather as a medium to obtain ready cash. However, some scholars are of the opinion that this tool should only be resorted to in extreme cases where an Islamic bank has no other option to avoid dealing in interest.

It is known in Arabic as (المرابحة السلعية).



ABC
The last three decades have witnessed the modern rebirth of Islamic finance both in terms of literature and practice. Islamic banks and ...
Watch on Youtube
Remember to read our privacy policy before submission of your comments or any suggestions. Please keep comments relevant, respectful, and as much concise as possible. By commenting you are required to follow our community guidelines.

Comments


    Leave Your Comment

    Your email address will not be published.*