Contemporary Islamic Banking
The Issue of Murabahah
Abstract
Murabahah is one of the most widely used instruments of financing by Islamic banks. Being a fixed income instrument it has some apparent similarity with conventional loans such as fixing of final liability, credit and collateral based structure etc. drawing criticism regarding its status as a shari‘ah compliant alternative product. The analysis of data, relevant documents and products structures has revealed that the apparent similarities do not have real substance and some of the strengths of Murabahah are obvious. The real problem is the issues involved in the implantation strategy of Islamic banks such as procurement methodology, use of non-Islamic reference indices, etc.
The essay deals in detail with issues involved in the practice of Murabahah.Findings of the study indicate that there are practical solutions available to resolve these issues.
References
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