All termsstructures
Murabaha
مرابحة
A cost-plus sale where the seller discloses the cost and profit margin upfront.
The bank buys an asset and sells it to you at a higher price, disclosing the markup. You pay the total in instalments. Because the profit is fixed at the point of sale (not accruing interest over time), scholars consider this permissible.
Islamic perspective
Murabaha is permitted because the profit is earned from a real trading transaction, not from the passage of time. The bank takes ownership risk, however briefly.
Example
Yusuf wants to buy a car for £20,000. The Islamic bank buys it from the dealer and sells it to Yusuf for £22,500 payable over 36 months. The £2,500 profit is agreed upfront and does not increase if Yusuf takes longer to pay.
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