Ibra’

Definition of "Ibra’"

Ibra’ represents the ‘waiver on right of claim’ accorded by a person to another person that has an obligation (zimmah) which is due to him. Ibra’ or ‘rebate’ refers to an act by a person relinquishing his rights to collect payment due from another person.

In the context of Islamic finance, an Islamic financial institutions (IFIs) may grant ibra’ to its customers of a sale-based financing (such as murabahah and bai’ bithaman ajil) who settled their debt prior to the agreed settlement period as stipulated in the agreement concluded by both parties.