Bank Albaraka
Introduction
In Pakistan, since 1991, AlBaraka Islamic Bank runs full-fledged
commercial banking operations. The Bank has four branches
in Pakistan, located in Karachi, Lahore, Faisalabad, and Islamabad.
The regional office of the bank in Pakistan is based in Lahore,
operating under the guidance and control of AlBaraka Bahrain.
The regional office has been delegated with authority to handle
Bank’s operations in Pakistan. The Pakistan operations
of the bank are run with a capital support of US$10 million.
By yearend 2000, the Bank’s assets were approx. US$
95 million.
Murabaha Car Financing
Murabaha sale is divided into two types:
1. Ordinary Murabaha sale:
There are two parties to it, the seller and the buyer. The
seller is an ordinary trader who buys a commodity without
depending on a prior promise of purchase, then he displays
it for Murabaha sale for a price and a profit to be agreed
upon.
2. Murabaha sale connected with a promise:
There are three parties to it. The seller, the buyer and
the bank as an intermediary trader between the buyer and the
seller. The bank here does not purchase unless the buyer specifies
his desire and a prior outstanding promise to purchase.
The mode of Murabaha sale connected to a promise is used
by the Islamic banks which undertake the purchase of commodities
according to the specifications requested by the customer
and then resell them on Murabaha to the one who promised to
buy for its cost price plus a pre-agreed profit.
There are different forms to the application of Murabaha
sale connected to a promise of purchase. Some of these forms
are determined by whether the promise is binding or not. Other
forms are determined by how the bank receives the commodity
in the case of the first sale. The bank may receive the commodity
directly or through one of its agents or it can authorize
the buyer to receive the commodity.
FEATURES
• Flexible repayment terms
• Competitive pricing
• Fixed/Reducing balance basis
• Minimum Murabaha finance: USD 50,000/-
• Variable tenors
The practical steps of the Murabaha sale
1. The purchaser determines his needs
The purchaser: Determines the specifications of the commodity
he wants and requests the seller to determine the price.
The seller: Sends a quotation valid for a certain period.
2. Signing a promise to purchase agreement
The purchaser: Promises to buy the commodity from the bank
on Murabaha sale for the cost of the commodity plus the agreed
upon profit.
The bank: Studies the request and determines the condition
and securities for approval.
3. The first sale contract
The bank: notifies the purchaser of its approval to purchase
the commodity. The bank may pay the price immediately or as
per the agreement.
The seller: Expresses his approval to the sale and sends
the invoice
4. Delivery and receipt of the commodity
The bank: authorizes the beneficiary to receive the commodity.
The seller: sends the commodity to the place of delivery agreed
upon.
The purchaser: undertakes the receipt of the commodity in
his capacity as legal representative and notifies the bank
of the execution of the proxy.
5. The Murabaha sale contract
The two parties (the bank and the purchaser) sign the Murabaha
sale contract according to the agreement of the promise to
purchase.
AREAS OF APPLICATIONS
Murabaha is one of the most widely used modes of financing
by the Islamic banks. It is suitable for partial financing
of investment by customers operating in industry or trade.
It enables the customer /investor to purchase finished goods,
raw material, machines or equipment from the local market
or through import. |
