A murabaha transaction whereby the Islamic bank (murabaha seller) purchases an asset/ commodity, upon the request of a customer (purchase orderer), from a third-party seller, in order to resell it to that customer on a deferred payment basis or on spot (murabaha halla). The bank will not resell the asset/ commodity unless title has been transferred from the seller to the bank.
This type of murabaha is widely used by Islamic banks, especially in foreign trade-financing operations. The purchase orderer can approach a bank, expressing his wish to buy a specific good. This wish may not be seen as a promise (wa’ad) or commitment by the customer to purchase the goods unless the promise has been documented in an official requisition form.
In this respect, murabaha to the purchase orderer (MPO) comes in two types: binding MPO, and unbinding MPO.
Murabaha to the purchase orderer (المرابحة للآمر بالشراء) is also known, in Arabic, as murabaha lil amer bil shira or murabaha lil wa’aed bil shira.
