Different Pricing for Cash and Credit Sales (An Islamic Banking Concept)
Most of the Islamic banks and financial institutions are using Murabaha as an Islamic mode of financing, and most of their financing operations are based on Murabaha. That is why this term has been taken in the economic circles today as a method of banking operations, while the original concept of Murabaha is different from this assumption. “Murabahah” is, in fact, a term of Islamic Fiqha and it refers to a particular kind of sale having nothing to do with financing in its original sense. If a seller agrees with his purchaser to provide him a specific commodity on a certain profit added to his cost, it is called a Murabaha transaction. The basic ingredient of Murabaha is that the seller discloses the actual cost he has incurred in acquiring the commodity, and then adds some profit thereon. This profit may be in lump sum or may be based on a percentage. It is proposed to discuss some relevant issues with reference to the underlying Islamic principles and their pract...