MURABAHA CASE STUDIES

CASE FOR LOCAL ADVANCE MURABAHA (COTTON INDUSTRY) BASIC LEVEL

REQUIREMENT:
1. What factors must be considered by you before finalizing Shariah compliant process flow
for the client?
The factors that I consider before finalizing Shariah compliant process flow for the client are s
follows.
The subject of sale must exist.
Not a HARAM good or subject must not be used for HARAM purpose.
Must be in an ownership.
The object must be of value.
The subject of sale must be in physical or constructive ownership of seller at the
time of sale.
The company or business I am going to make a contract with must follow the
rules of land. (dont violate the acts or any law)
The subject must be well specified and identified before the transaction take
place.
2. Devise a process flow based upon your recommendations.
A process flow according to my limited knowledge is as follows.
Client and bank sign an agreement to enter into Murabaha (MMFA).
Client will be most probably appointed as Banks agent and that agent will
purchase good on banks behalf.
Bank give money to agent or to supplier directly for purchase of goods.
The agent then takes the possession of goods on behalf of bank.
Client makes the offer to purchase the goods from bank through declaration.
Bank accepts the offer and sale is concluded.
Client pays agreed price to bank according to agreed schedule. Remember it may
be on spot , in installments or lump sum payment after a certain period of time.
Mostly its on deferred payment
GOODS IN THIS CASE STUDY MAY INCLUDE RAW COTTON OR ANY
OTHER GOOD RELATED TO COTTON GINNING, OIL, OIL
MANUFACTURING (EXTRACTION)

CASE FOR ADVANCE MURABAHA COTTON INDSTRY (ADVANCE LEVEL)

REQUIREMENT :
You are required to suggest the best suitable structure of financing for the customer and the
procedure for the customer keeping in view of devised structure.
MY RESPONSE:
My suggestion for this case study keeping in view of client, Shariah compliant is as follows.
When the customer reached Meezan bank for financing over the cotton bales purchasing from
local or foreign market Meezan bank will follow the step for foreign and local supplier
differently.
For foreign supplier the Meezan bank will open LC and an agreement will be signed between
customer and bank to enter into Murabaha contract then bank will appoint customer as a bank
agent And agent will purchase good on behalf of bank and bank will pay supplier and that agent
will offer the bank to purchase that good and bank will accept that offer bank will get its profit
through sale of good to customer on higher rates and sale concluded that will be simple
Murabaha contract and thats how bank will finance .
But when local supplier is in part of transaction the process will be as a like but LC will be
excluded from previous process flow. Otherwise the whole process will be same.