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The Principles and Practices of Shariah in Islamic Finance - page 31 / 49

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Eligible assets for Murabahah

Assets for valid and enforceable sale

Legal or beneficial ownership

of asset

  • 0

    • 5.4

      Asset

  • 50.

    Assets such as traded goods, production materials, property, equipment and fixtures, and other intangible and non- monetary assets, are eligible assets for sale provided that they are not specifically prohibited in the Quran and Sunnah such as usurious items in the category of medium of exchange, liquor and flesh of swine.

51. Assets to be purchased for Murabahah sale shall be assets which are in existence, valid and can be considered for an enforceable sale. Assets under construction are not eligible for Murabahah sale.

Illustration 14: Invalid Assets for Murabahah Transaction

A customer requested an IFI to finance the purchase of an unoccupied property. Upon communication with the potential seller, it was found that the property was registered in the name of a foundation and is designated as Waqf property. Since Waqf property is meant for the society and not subject to commercial sale, financing for the identified property is not permissible and not valid from the view point of Shariah principle.

52. Asset meant to be sold to the purchase orderer on Murabahah basis shall be legally and/or beneficially owned by the IFI prior to the Murabahah sale to the customer.

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