Murabaha

Murabaha is a particular kind of sale where the seller discloses to the buyer, the cost of goods sold and his profit margin. The sale can be on spot or deferred basis. Furthermore, once the transaction has been executed the selling price cannot be changed.Islam prohibits charging interest on money, but permits charging profit on sale of goods. Modarabas, therefore, use a sale-based transaction (Murabaha) instead of loan-based transactions for financing purchase of assets by their clients. The Modaraba upon request by the customer purchases an asset from the supplier and re-sells the asset to the customer after adding a pre-determined profit on it. Goods to be traded should be real and must be existing, owned by the seller and in his physical or constructive possession. KASB Modaraba provides Murabaha financing for short tenures (Up to 1 year) to corporate customers who bear self-generating repayment capacity.