Financial Murabahah

Definition of "Financial Murabahah"

A contract of sale being practised by Islamic banks, according to which the banks act as intermediaries to provide finance for purchasing goods to a buyer on the basis of murabahah. The banks charge a mark up on the sale price quoted by the seller and agree to receive the amount from the buyer over a period of time in the future. This is a development of the classical concept of bai‘ al-murabahah, where the sale was mainly a cash transaction. See also bai‘ al-murabahah.