By Sami Zaptia.
London, 22 July 2020:
In an increasingly crowded and competitive market, Libya’s private sector North Africa bank is offering an Islamic (Murabaha) loan to customers for the purchase of household furniture and durable goods. The loan is up to LD 2,500.
‘‘Murabaha’’ Islamic banking
It will be recalled that the term Murabaha in Islamic banking refers to what is also referred to as ‘‘cost-plus financing’’, in Islamic financing structures. This is where the seller provides the cost and profit margin of an asset.
Murabaha is not an interest-bearing loan (qardh ribawi) but is an acceptable form of credit sale under Islamic law. As with a rent-to-own arrangement, for example, the purchaser does not become the true owner until the loan is fully paid.
In a Murabaha contract of sale, the client petitions the bank to purchase an item for them. The bank establishes a contract setting the cost and profit for the item, with repayment typically in instalments.
Because a set fee is charged rather than interest (riba), this type of loan is legal in Islamic banking.
Islamic banks are prohibited from charging interest on loans according to the religious tenet that money is only a medium of exchange and has no inherent value; so banks must charge a flat fee for continuing daily operations.
Many see Murabaha as simply another method of charging interest. However, the difference lies in the structure of the contract. In a Murabaha contract for sale, the bank buys an asset and then sells the asset back to the client with a profit charge. This type of transaction is valid, according to Islamic Sharia.
https://www.libyaherald.com/2020/07/22/wahda-bank-enables-customers-eid-ram-purchase-via-its-mobicash-mobile-app/
https://www.libyaherald.com/2020/07/20/interior-ministry-offers-tadawul-debit-card-interest-free-loan-for-eid-ram/
https://www.libyaherald.com/2020/07/19/waha-bank-offers-interest-free-prepaid-card-loan-for-eid-ram/
https://www.libyaherald.com/2020/07/15/sahary-bank-launches-interest-free-card-loan-to-buy-eid-ram/
