Murabaha

Murabaha (Arabic: مرابحة, literally 'profit-sharing sale') is a sale transaction in which the seller expressly discloses the cost of the commodity and sells it to the buyer at a cost-plus-profit-margin price. In modern Islamic banking, it is structured as a purchase-order Murabaha: the customer requests the bank to purchase a specified asset, the bank acquires it and takes possession, then resells it to the customer at the disclosed cost plus an agreed profit, with payment deferred or made in instalments. It is the most widely used Islamic financing mechanism, accounting for approximately 75-80% of Islamic banking transactions globally. The contract is governed by AAOIFI Shariah Standard No. 8.