Commodity Murabaha
Shariah structure using commodity trades for liquidity or financing needs.
Detailed Description
Commodity Murabaha
What is the main principle behind Commodity Murabaha?
The main principle is to provide financing through the sale of a commodity at a profit margin, ensuring compliance with Islamic law by avoiding interest.
How does the repayment process work in Commodity Murabaha?
The client pays the predetermined price, which includes a profit margin, either in installments or as a lump sum at a future date.
What are the key features of Commodity Murabaha?
Key features include Sharia compliance, asset-backed financing, a fixed profit margin, and flexibility in repayment terms.
What are some risks associated with Commodity Murabaha?
Risks include market fluctuations, liquidity risk, regulatory changes, and operational challenges related to compliance.
How does Commodity Murabaha differ from traditional financing methods?
Unlike traditional financing, which is interest-based, Commodity Murabaha is structured around the sale of a commodity with a fixed profit margin.