At LB Al-Salamah, we offer Murabaha Financing, a Shari’ah-compliant solution designed for customers who seek ethical alternatives to conventional debt-based financing. Rooted in Islamic commercial law, Murabaha is a cost-plus-profit sale that promotes transparency, fairness, and responsible financial dealings.
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Murabaha is a type of sale contract where the seller (LB Al-Salamah) purchases goods on behalf of the customer and sells them to the customer at a disclosed cost plus a pre-agreed profit margin. The transaction is not a loan but a trade-based arrangement, where ownership of the asset is first held by the financier before being transferred to the client.
This structure is widely used to finance goods, assets, and commodities, as long as the exact purchase cost is known and documented a key requirement for Shari’ah compliance.
- LB Finance discloses the actual cost of the goods (including freight, taxes, duties, etc.) andadds a fixed profit margin, agreed upon in advance.
- Profit is derived from a genuine sale transaction, not from lending money.
- Financing is extended only for tangible goods or commodities, ensuring that the transaction is rooted in real economic activity.
- All costs involved in acquiring the asset are clearly disclosed to the customer.
- Structured under the guidelines of Shari’ah Supervisory Board, ensuring every transaction is accordance with Shari’ah-compliant.
- Murabaha cannot be used for cash financing or for items with undefined costs. It must be linked to an actual purchase and sale of goods.
- Financing machinery or business equipment.
- Purchase of vehicles.
- Retail goods financing.
- Personal durable goods (under consumer Murabaha).
- Transparent pricing with full cost disclosure.
- Structured repayment options.
- Ideal for Individuals, SME’s, and Corporate’s.
- Encourages real economic activity and discourages speculation.
