“Murabaha” is, in fact, a term of Islamic Fiqh and it refers to a particular kind of sale in which the seller sells the commodity to the buyer by disclosing cost and profit. The profit may be in lump sum or may be based on a percentage. The payment in the case of Murabaha may be at spot, and may be on a subsequent date agreed upon by the parties. For example: ‘A’ purchased a pair of shoes for PKR 500. He wants to sell it on Murabaha with 10% profit. If he sells a pair of shoes by disclosing cost and profit to ‘B’, it is called Murabaha.

Since Murabaha is a kind of sale, the basic rules of sale are applied for Murabaha transaction without which Murabaha transaction is not valid. These rules are:

The subject of sale must be existing at the time of sale. The subject of sale must be in the ownership of the seller at the time of the sale. The subject of sale must be in the physical or constructive possession of the seller when he sells it to another person.

How It Works

In the light of the aforementioned principles, UBL Ameen offers mode of financing based on Murabaha by adopting the following procedure:


The client and UBL Ameen sign agreement whereby the institution promises to sell and the client promises to buy the commodities on an agreed ratio of profit. This agreement specifies the limit up to which the facility may be availed.


When a specific commodity is required by the customer, UBL Ameen appoints the client as his agent for purchasing the commodity on its behalf; therefore an Agency Agreement is signed by both the parties.


The client purchases the commodity on behalf of UBL Ameen and takes its possession as an agent of UBL Ameen.


The client informs the bank that he has purchased the commodity on his behalf, and at the same time, makes an offer to purchase it from UBL Ameen or UBL make offer to sell to the customer.


UBL Ameen accepts the offer to purchase or customer accepts offer to sell and at this point, the sale is concluded whereby the ownership as well as the risk of the commodity is transferred to the client.