Murabahah: cost-plus sale

Murabahah is a sale in which the seller discloses the cost of the goods and adds a stated profit margin. It is not a loan: the institution must first acquire and take genuine ownership of the asset, bear the risk while it holds it, and only then sell it to the customer at a transparent, fixed markup.

The distinction that keeps murabahah lawful is ownership and risk. Selling something one does not yet possess, or charging an “increase” on money rather than on a real good, collapses it back into riba.

Standard

The institution must acquire the asset and take possession — actual or constructive — before selling it onward under murabahah.

Because the margin is fixed and disclosed, murabahah cannot be re-priced like a variable-return instrument. This is why funds carrying a variable-return mandate must be kept strictly separate from murabahah execution.