Knowing The Very Basics Of A Murabaha Loan Structure

Islamic financing in various forms and shapes is playing an increasingly important role within the overall money markets. In essence, Islamic financing is provision of financial services in accordance with Shari'ah law. Shari'ah law does not permit receipt and payment of interest, making any short sales or lending that will be deemed against the society's interest. The latter of course demands an evaluation, a judgement call to be made by a presiding authority. This is where the Shari'ah Board comes into action which is the authority making the determination that the financing transaction is in compliance both from the contractual terms and conditions aspect and the aspect of interest to the society (which is why for example financing for personal consumer needs are likely to be overruled by the Board). The parties must share the risk and rewards of a business transaction which is being funded and such transaction shall have a real economic purpose without undue