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MURABAHA CASE STUDIES

CASE FOR LOCAL ADVANCE MURABAHA (COTTON INDUSTRY) BASIC LEVEL

REQUIREMENT:

1. What factors must be considered by you before finalizing Shariah compliant process flow

for the client?

The factors that I consider before finalizing Shariah compliant process flow for the client are s

follows.

The subject of sale must exist.

ot a !"#"$ good or subject must not be used for !"#"$ purpose.

$ust be in an ownership.

The object must be of %alue.

The subject of sale must be in physical or constructi%e ownership of seller at thetime of sale.

The company or business I am going to ma&e a contract with must follow the

rules of land. 'don(t %iolate the acts or any law)

The subject must be well specified and identified before the transaction ta&e

place.

*. +e%ise a process flow based upon your recommendations.

" process flow according to my limited &nowledge is as follows.

,lient and ban& sign an agreement to enter into $urabaha '$$-").

,lient will be most probably appointed as an&s agent and that agent will

purchase good on ban&s behalf.

an& gi%e money to agent or to supplier directly for purchase of goods.

The agent then ta&es the possession of goods on behalf of ban&.

,lient ma&es the offer to purchase the goods from ban& through declaration.

an& accepts the offer and sale is concluded.

,lient pays agreed price to ban& according to agreed schedule. #emember it may

be on spot / in installments or lump sum payment after a certain period of time.$ostly its on deferred payment

GOODS IN THIS CASE STUDY MAY INCLUDE RAW COTTON OR ANY

OTHER GOOD RELATED TO COTTON GINNING, OIL, OIL

MANUFACTURING (EXTRACTION)

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CASE FOR ADVANCE MURABAHA COTTON INDSTRY (ADVANCE LEVEL)

REQUIREMENT :

0ou are reuired to suggest the best suitable structure of financing for the customer and theprocedure for the customer &eeping in %iew of de%ised structure.

MY RESPONSE2$y suggestion for this case study &eeping in %iew of client/ Shariah compliant is as follows.

When the customer reached $eezan ban& for financing o%er the cotton bales purchasing from

local or foreign mar&et $eezan ban& will follow the step for foreign and local supplierdifferently.

-or foreign supplier the $eezan ban& will open 3, and an agreement will be signed between

customer and ban& to enter into $urabaha contract then ban& will appoint customer as a ban&

agent "nd agent will purchase good on behalf of ban& and ban& will pay supplier and that agentwill offer the ban& to purchase that good and ban& will accept that offer ban& will get its profit

through sale of good to customer on higher rates and sale concluded that will be simple$urabaha contract and that(s how ban& will finance .

ut when local supplier is in part of transaction the process will be as a li&e but 3, will beexcluded from pre%ious process flow. 4therwise the whole process will be same.