Definitions for "Murabaha"
Keywords:  islamic, ajil, thamin, riba, shariah
In Islamic finance, murabaha is a contract of sale in which the seller and buyer agree on the seller's cost and profit.
also bai bi thamin al ajil, sales with a profit mark-up. This term has come to mean both spot and deferred payment sales engaged in by Islamic banks and is often used as a form of installment credit.
(Cost-Plus Financing): Sales with a profit markup. This term has come to mean both spot and deferred payment sales in which Islamic banks engage.
Quick definition: purchase and resale. As opposed to lending money, the capital provider purchases the required asset or product (for which a loan would otherwise have been taken out) from a third party. The asset is then resold at a higher price to the capital user. By paying this higher price by instalments, the capital user effectively gets credit without paying interest. (Also see tawarruq the opposite of murabaha.)
Purchase and resale. Instead of lending out money, the capital provider purchases the desired commodity (for which the loan would have been taken out) from a third party and resells it at a predetermined higher price to the capital user. By paying this higher price over instalments, the capital user has effectively obtained credit without paying interest.