Murabaha is the most common Islamic financing product in the world. It is a cost-plus sale: the bank buys an asset at market price, then sells it to the customer at a disclosed markup. The customer pays in installments.
For example, you want a car worth $30,000. The bank buys it, then sells it to you for $35,000 payable over 5 years. The $5,000 markup is the bank's profit — not interest. The total price is fixed at the start and does not change regardless of market conditions or late payments.
Murabaha accounts for roughly 75-80% of all Islamic banking transactions globally. Critics argue it closely resembles conventional lending, but Shariah scholars maintain that the bank's brief ownership of the asset and the fixed, transparent markup make it fundamentally different from interest-based loans. globally. Critics argue it closely resembles conventional lending, but Shariah scholars maintain that the bank's brief ownership of the asset and the fixed, transparent markup make it fundamentally different from interest-based loans.