Bai' al-murabaha

Bai' al-murabaha is a type of Islamic financial transaction where a buyer and seller agree on a marked-up price for a goods or assets. Typically, a buyer seeks to purchase something, and the bank or financial institution buys it first. Then, the bank sells it to the buyer at a pre-agreed profit margin, paid in installments. This arrangement complies with Islamic principles because it involves transparent cost-based pricing without charging interest. It’s commonly used for financing equipment, property, or other assets, providing a Shariah-compliant alternative to conventional interest-based loans.