Issues in Contemporary Implementation of Murabaha

Abstract

This research intended to explore issues in the contemporary implementation of Murabaha in Pakistan. For this purpose, the model agreements of Murabaha, obtained from the State Bank of Pakistan (SBP) and two Islamic banks (IB-I and IB-II), were analysed through content analysis. Resultantly 7 misgivings/issues were identified in form of open-ended questions. These issues were discussed with 30 Shari’ah scholars through semi-structured interviews in order to verify them as Shari’ah issues or clarify them as no Shari’ah issues. The findings confirmed no Shari’ah issue in appointing the customer as agent by the bank but shifting the supplier’s risk to the agent was a practical Shari’ah issue. Further, filling and signing all the documents of Murabaha at the same time was confirmed as a serious Shari’ah issue equivalent to selling a commodity without assuming the ownership risk creating another Shari’ah issue. Shifting all types of risks to the customer either as agent or as ultimate consumer reflected the whole Murabaha as heela.