purchase by the bank or through its agent is not practicable, it is also allowed that the bank appoints the client himself as their agent to buy the commodity on behalf of the bank. STEPS OF BAI-MURABAHA PRACTISED BY ISLAMIC BANKS First Step: Submission of Proposal The client sends a proposal with the specification of the commodity to be acquired from the bank. The proposal also indicates details regarding the date, time and place of delivery as well as information about cost and profit and the form of payment. The bank responds by sending a counter proposal either accepting the buyerâ€™s offer or stipulating a different one or they may regret the same. Second Step: Signing a promise to Purchase The client agrees with the bankâ€™s counter offer/proposal and promises to buy the commodity from the bank on Bai-Murabaha basis, for the stipulated cost plus profit and places the order to buy the goods by the bank. The bank accepts the order and establishes the terms and conditions of the transaction. Third Step: The first sale contract The bank communicates the client (ultimate buyer) of its approval of the agreement to purchase the ordered goods as per specification given by him. The bank, on receipt of clientâ€™s reply in the affirmative, sends an offer to the seller in the market to sell the goods to the bank with detailed terms and conditions. The seller (in the market) expresses their approval to sell and sends the invoice to the bank. Fourth Step: The signing of a Murabaha Sale Contract The two parties (the bank and the ordering client) sign the Bai-Murabaha contract according to the agreement to purchase. Fifth Step: Delivery and Receipt of the Commodity The Bank authorizes his nominee or the client as their agent to receive the commodity on behalf of the bank. The seller (in the market) sends the commodity to the place of delivery agreed upon. The nominee or the agent (client) undertakes the receipt of the commodity in its capacity as legal representative of the bank and notifies the bank of the execution of the proxy.
Published on Mar 10, 2013