Meezan Bank Limited. · PSX:MEBL
Meezan Bank — Slide 1
14 slides from Meezan Bank's investor presentation, Jun 25, 2009
Slide 1: Introduction to Murabaha
Introduction to Murabaha Version 2.0 Release Date: Jamad ul Thani 31, 1430 H June 25, 2009 Prepared By: Product Development and Shariah Compliance Department
Slide 2: Definition of Murabaha
Definition of Murabaha • Murabaha is a particular kind of sale and not a financing in its origin. • Where the transaction is done on a “cost plus profit” basis i.e. the seller discloses the cost to the buyer and adds a certain profit to it to arrive at the final selling price.
Slide 3: Murabaha
Murabaha • The distinguishing feature of Murabaha from ordinary sale is: - The seller discloses the cost to the buyer. - And a known profit is added.
Slide 4: Murabaha
Murabaha Basic rules for Murabaha financing: • Asset to be sold must exist. • Sale price should be determined. • Sale must be unconditional. • Assets to be sold: a) Should not be used for un-Islamic purpose. b) Should be in ownership of the seller at the time of sale; physical or constructive.
Slide 5: Step by step Murabaha Financing
Step by step Murabaha Financing
Slide 6: Murabaha
Murabaha 1. Client and bank sign an agreement to enter into Murabaha (MMFA). Bank Client Agreement to Murabaha
Slide 7: Murabaha
Murabaha 2. Client appointed as agent to purchase goods on bank’s behalf Bank Client Agreement to Murabaha Agency Agreement
Slide 8: Murabaha
Murabaha 3. Bank gives money to agent/supplier for purchase of goods. Bank Agreement to Client Murabaha Agency Agreement Disbursement to the agent or supplier Supplie r
Slide 9: Murabaha
Murabaha 4. The agent takes possession of goods on bank’s behalf. Delivery Transfer of Vendor of goods Risk Bank Agent
Slide 10: Murabaha
Murabaha 5(a). Client makes an offer to purchase the goods from bank through a declaration. Bank Clien t Offer to purchase
Slide 11: Murabaha
Murabaha 5(b). Bank accepts the offer and sale is concluded. Murabaha Agreement + Transfer of Title Bank Client
Slide 12: Murabaha
Murabaha 6. Client pays agreed price to bank according to an agreed schedule. Usually on a deferred payment basis (Bai Muajjal) Bank Payment of Price Client
Slide 13: Application of Murabaha
Application of Murabaha
Slide 14: Applications of Murabaha
Applications of Murabaha • Purchase of raw material; for meeting working capital needs of trade and industry. • Medium to long term requirements for purchase of land, building and equipment. • Trade finance products including imports, exports and bill purchase.