The majority of the jurists hold that if the earlier

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The majority of the jurists hold that if the earlier payment is conditioned with discount, it is not permissible. Rebate is only permissible if the creditor gives it voluntarily. 15 Issues in Murabahah Financing
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Calculation of Cost in Murabahah Seller has to ascertain the exact cost he has incurred in acquiring the commodity in a Murabahah Sale. In some cases, the bank purchases the commodity from abroad at a price denominated in a foreign currency payable after three months or in different installments, and sells the commodity to his client before he pays the full price to the supplier. Murabahah based on this condition is not valid because it leads to uncertainty of the price at the time of sale. 16 Issues in Murabahah Financing
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Subject - Matter of Murabahah All commodities which may be allowed in Shariah and can be subject matter of sale with profit can be subject matter of Murabahah, because it is a particular kind of sale. e.g., Shares of a company. Conversely, no Murabahah can be effected on things which cannot be subject - matter of sale. e.g., currencies, because it must be spontaneous or, if deferred, on the market rate prevalent on the date of the transaction. e.g., a debt receivable by the holder cannot be sold or purchased except at par value, and therefore no Murabahah can be effected in respect of such papers. 17 Issues in Murabahah Financing
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Rescheduling of Payments in Murabahah If the installments are rescheduled, no additional amount can be charged for rescheduling. The amount of the Murabahah price will remain the same in the same currency. 18 Issues in Murabahah Financing
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Securitization of Murabahah Murabahah is a transaction which cannot be securitized for creating a negotiable instrument to be sold and purchased in secondary market. The reason is obvious. If the purchaser/client in a Murabahah transaction signs a paper to evidence his indebtedness towards the seller/financier, the paper will represent a monetary debt receivable from him. Where money is exchanged for money (in the same currency) the transfer must be at par value. It cannot be sold or purchased at a lower or a higher price. Therefore, the paper representing a monetary obligation arising out of a Murabahah transaction cannot create a negotiable instrument. 19 Issues in Murabahah Financing
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Some Basic Mistakes in Murabahah Financing The most glaring mistake is to assume that Murabahah is a universal instrument which can be used for every type of financing. Cannot be used for financing overhead expenses of a firm or company like paying salaries of their staff, paying the bills of electricity etc. and setting off their debts payable to other parties. Murabahah can be used only where a commodity is intended to be purchased by the customer.
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