Tawarruq (also called commodity Murabaha) is a way to obtain cash in Islamic finance without taking an interest-based loan. Here is how it works: a bank buys a commodity (like metals) on your behalf, sells it to you on credit at a markup, and then you immediately sell the commodity to a third party for cash at market price.
The result? You get cash now and repay the bank later in installments. The bank earns a profit from the markup — not from interest. It is one of the most widely used structures in personal Islamic financing across the Gulf countries and Malaysia.
Critics argue that Tawarruq is essentially a back-door way to replicate conventional loans. Some scholars consider organized Tawarruq (where the bank arranges the entire chain) to be impermissible, while others accept it as a practical necessity.