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In plain terms
Murabahah
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Murabahah is a sale in which the seller discloses the item's cost and adds an agreed profit margin. Banks often use it as a financing structure, buying an item and reselling it to a customer at a markup. Its validity depends on the bank owning the item first, usually paid back in installments.
Related terms
Riba
Riba is the term used in the Qur'an and hadith for an unjustified increase in a loan or in certain exchanges. It is commonly translated as interest or usury. Fatwas on banking…
Mudarabah
Mudarabah is a partnership in which one party provides capital and another provides labor or expertise. Profits are shared by an agreed ratio, and losses fall on the capital…