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SIBL EXPERINCE OF MURABAHA INVESTMENT It is observed that Murabaha occupied 56% of total financing where Hire Purchase under Shirkatul Melk has 32%in the ear 2!""# It is to state that the earl financing $ode of all Isla$ic banks Musharakah due to e%periencing so$e bad occurrences in this $ode
has near to !% invest$ent b the bank where Murabaha Shows stead rate of volu$e in invest$ent portfolio 55 % of total invest$ent# HPSM is another preferable $ode b the bank at present
+he Shariah pre re,uire$ents for trading in goods and services are as follows& "# It is re,uired that the parties to a transaction are of sound $ind and that the decide to enter into a trade b free will* without an coercion# 2# +he ob-ect of sale $ust be halal and it $ust be in e%istence or ordinaril available in the $arket at the ti$e of sale 3# +he seller $ust own the ob-ect of sale before it is sold and delivered to a purchasing part # .# 'n una$biguous price $ust be $utuall agreed and paid b the purchaser to conclude the sale# /onsidering the above re,uire$ents* it is clear that the $ost i$portant re,uire$ent for trading in goods and services is that the seller $ust own what the sell to another part # Hence* in the above0 $entioned Murabaha0based financing the real re,uire$ent for the financing part is to own and then sell the asset to the custo$er# +he duration of ownership is not a shariah concern1 rather it
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should be an econo$ic decision# 3or a trader* the less ti$e an ite$ spends in the inventor * the $ore efficient the trade#
Here in the figure the proportionate invest$ent to different $odes under Murabaha where 4ai0 Mua55al under Murabaha shows higher percentage al$ost (! % of total invest$ent b SI46
SI46
'gree$ent to
/6I78+
Murabaha +he client and the 4ank sign an over0all agree$ent whereb the institution pro$ises to sell and the client pro$ises to bu the co$$odities fro$ ti$e to ti$e on an agreed ratio of profit added to the cost# +his agree$ent $a specif the li$it up to which the facilit $a be availed#
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SI46
/6I78+
9hen the custo$er re,uires a specific co$$odit * the bank appoints the client as his agent for purchasing the co$$odit on its behalf* and both the parties sign an agree$ent of agenc #
SI46
/6I78+
'gent
+he client purchases the co$$odit on behalf of the institution and takes its possession as an agent of the institution#
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SI46
/6I78+
>ffer to purchase
+he client infor$s the bank that he has purchased the co$$odit on his behalf* and at the sa$e ti$e* $akes an offer to purchase it fro$ the institution# STEP: 5 BANK ACCEPTS THE OFFER AND SALE IS CONCLUDED
/6I78+
't the "st step& understanding of sale and purchase 't the 2nd and 3rd steps& =elation of principle and agent# 't the .th step& =elation between the bank and the supplier is that of a bu er and seller# 't the .th and 5th steps& =elation of bu er and seller co$es into operation between the bank and the client# +he relation between bank and client is that of debtor and creditor#
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Supplier
3ig& Mechanics of Murabaha
SI46
/usto$er
+he custo$er approaches the 4ank with the re,uest for financing +he 4ank purchases and receives title of ownership fro$ the Supplier +he 4ank $akes pa $ent to the Supplier +he 4ank transfers the title over to the custo$er upon pa $ent +he custo$er $akes pa $ent up0front or on a deferred basis
Purpose& Since conventional bank allow cash finance@running finance@de$and finance as one ear short ter$ loan facilities* thus Isla$ic bank hence SI46 is also re,uired to satisf that financing li$it is available to the custo$er SI46 has to prove that the bank deals as financial inter$ediaries# Part =elationship& Shariah status bilateral pro$ise to witness that bank pro$ised with the custo$er to BfinanceC raw $aterial* tradable goods to the custo$er# 4ankDs Status& Pro$isor /usto$erDs Status& Pro$isee =isk Involved&
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In the absence of an financing agree$ent i#e# Murabaha facilit agree$ent the S4P auditors will dee$ the sale purchase of goods between the bank A custo$er as trading has been carried out b SI46 as trader# a# Man ter$s A conditions need to linked out for e%a$ple1 i# Ma%i$u$ a$ount of finance available to the custo$er to $a%i$u$ e%tent of annual raw $aterial@tradable goods# ii# Ma%i$u$ tenure of each Murabaha contract needs to be agreed upon# 'l$ost all Isla$ic banks do not allow Murabaha be ond "(! da s tenure# +he reason being Murabaha contract selling price consist of cost A profit# >nce the selling price is fi%ed cannot be changed# =isk Mitigation& SI46 should e%ecute agenc agree$ent first A si$ultaneousl Murabaha facilit agree$ent with sanction advice@ offer letter should be sub-ect to the e%ecution of both above said agree$ent#
2, P-#(+&)" R"2- ) % 3$ O#4"#
Purpose& +o confir$ that agent re,uires purposing so$e specific goods $ention on purchase re,uisition* thus SI46 beco$e able to know what goods are going to be purchased b agent#
Part =elationship& SI46 is the principal A client is agent# Status of =elationship& 'genc =isk Involved& If purchase re,uisition or purchase order is not sub$itted b the agent Bin ti$eC* there is a risk that SI46 $a be classified as Bacting against lawC# +his create the difference that the co$$ercial bank not to act as trading house A if SI46 does not receive an purchase @order fro$ the custo$er as agent and goods are purchased then Isla$ic Shariah is violated b the bank# =isk Mitigation& In case of finance related business purchase order application received b SI46#
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Purpose& +o restrain the agent to purchase goods without principal authorit # Part relationship& SI46 is the principal A client is agent# Status of =elationship& 'genc =isk Involved& If purchase advice is not issued b SI46 in ti$e @before purchase of goods* the agent b issuing -ust a purchase re,uisition @order $a purchase so$e dangerous goods which risk is borne b SI46
=isk Mitigation& SI46 should issue purchase advice before the goods are purchased b the bank#
4, I$!3#1&% 3$ M"13#&$4-16D"(*&#&% 3$
Purpose& +o bind the agent to infor$ the principal i$$ediatel after the goods are possessed b the agent# Part =elationship& SI46 is the principal A client is agent#
Status of =elationship& 'genc =isk Involved& If infor$ation $e$orandu$ declaration is not issued Bin ti$eC i$$ediatel after the goods possessed b the agent* the goods $a be consu$ed b the agent in its possession before the infor$ation $e$orandu$ @ declaration is issued b the agent* thus once the goods have been consu$ed that do not e%ist accordingl conse,uentl no sale purchase of such goods can be e%ecuted which do not e%ist* however b neglecting this Shariah principal an act for the sale purchase of such goods will render such t pe of sale as void#
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=isk Mitigation& SI46 /o$pute average raw $aterial consu$ption period in ter$ of da s for each respective client# F 'verage stock or stock value at an particular point in ti$e 'verage consu$ption of raw $aterial per da 3or e%a$ple&
.5 da sF
% (.2*!!!@36!
4:+ "!3*(!(
+his .5 da s period will be beco$e bench $ark* under which SI46Ds concerned officer $ust take infor$ation $e$orandu$@ declaration fro$ the agent# However* there should be a concrete product polic to $onitor that1 a# In case of locall $anufactured goods there should not be lapse of "5 da s fro$ the date the pa order@ de$and draft is issued b the bank and declaration is issued b agent# b# In case of i$ported goods* there should be "5 da s fro$ the date the 6/ is established b the bank as opening@ issuing applicant bank A infor$ation $e$orandu$ declaration is issued b the agent#
5, O!!"# 7 A(("'%&$(" F3# M-#&.&+& Purpose& +o e%ecute sale purchase between the bank A client for the goods* possessed b client as agent of bank# =elationship& 4ank is the seller A client is bu er# =isk Involved&
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If sale is not e%ecuted in ti$e* then bank involve in a risk of e%ecuting Murabaha contract for the goods which does not e%ist# +he reason being the client feels co$fort while consu$ing the goods in its possession that the issuance of infor$ation $e$orandu$@declaration was the enough sufficient docu$ent to consu$e the goods# 3urther* nor$all bank wait for receiving of co$$ercial invoice@sale ta% invoice as an evidence of ownership to e%ecute sale of Murabaha with the custo$er# 'n other docu$ent which proves that ownership has been taken b the bank should be used to avoid BvoidC contract of Murabaha# Such docu$ents in case of local $anufactured goods are1 a# =ailwa @truck receipt b# Goods dispatch note issued b supplier c# Goods received note* being prepared at client pre$ises# 9hereas in case of i$port goods* receiving of bill of lading is a first class docu$ent evidenced the ownership of bank# +here are two kinds of possession1 a# Ph sical b# /onstructive through this kind of possession over goods is taken through a docu$ents evidencing the transfer of ownership# =isk Mitigation& I$$ediatel after receiving the infor$ation $e$orandu$@declaration fro$ the client Murabaha contract should be e%ecuted on the sa$e da based on constructive possession* now on this stage following conditions of a valid sale are fulfilled1
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C3$4 % 3$ 3! 5&* 4 )&*"): Parties to the contract for $aking offer A acceptance# >wnership of the sub-ect $atter with the seller# Possession over the goods $ust be with the owner of the goods ph sical or constructive ;free charge having full infor$ation that there is no clai$ of ant third part over the goods like Mortgage* pledge* h pothecation charge<#Price ;sa$an< @ 6awful /onsideration#
6'-
+here are a nu$ber of docu$ents involved in a Murabaha financing transaction# +he $ost essential of these docu$ents that is produced b SI46 are& Master Murabaha 3inance 'gree$ent ;MM3'< 'genc 'gree$ent >rder 3or$ Su$$ar Pa $ent Schedule :eclaration
ItDs an agree$ent between the client and the bank whereb the client agrees to purchase goods fro$ the bank fro$ ti$e to ti$e as per the ter$s and conditions of this agree$ent# MM3' is an over all facilit agree$ent under which various Sub0Murabaha $a be e%ecuted fro$ ti$e to ti$e# Hence it needs to be signed once at the ti$e the facilit is sanctioned#
A0"$(/ A0#""1"$% +he client is appointed b the bank as its agent to purchase goods# +his agree$ent needs to be signed once between the client and the bank# +he disburse$ent of funds is done under this agree$ent# /lient needs to fill out the list of assets which it will purchase#
O#4"# F3#18 S-11&#/ P&/1"$% S(+"4-*" +hese docu$ents are re,uired for ach disburse$ent@ Sub0Murabaha tranche# D"(*&#&% 3$ :eclaration is to be signed b the custo$er i$$ediatel after it has purchased the goods# +his docu$ent establishes the actual sale transaction* i0e transfer of ownership of goods fro$ the bank to the custo$er# 't this stage the specific details of the assets $ust be known i0e ,uantit * ,ualit etc# proper ti$ing of declaration is e%tre$el i$portant#
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6'/
"# +i$ing of H>ffer A 'cceptanceD 2# =ollover in Murabaha 3# =ebate on 7arl pa $ent .# Penalt in 6ate pa $ent 5# Sub-ect Matter 6# Purchase 7vidence E# :irect Pa $ent (# Profit recognition )# +raining of /usto$er A 4ank staff "!# Process of Murabaha differ fro$ product to products
1, T 1 $0 3! 9O!!"# 7 A(("'%&$(" I ' Murabaha financing arrange$ent consists of a series of docu$ents to be e%ecuted at various stages* the se,uence and ti$ing of which is e%tre$el i$portant# I +hrough this* client and the bank e%ecute an i$portant step of a valid Murabaha sale i#e# >ffer A 'cceptance# I +his is to be signed b the custo$er when it has purchased and taken possession of the goods as the 4ankDs agent# I >ffer A 'cceptance $ust be signed while the goods are still in e%istence and have not been used in the production process or sold to so$e other entit # 2, R3**35"# $ M-#&.&+& I =ollover in Murabaha is not allowed since each Murabaha transaction is for the purchase of a particular asset# ' new Murabaha can onl be e%ecuted for the purchase of new assets# I It is advisable that whenever practicable there $ust be a gap of "02 da s between $aturit of the previous Murabaha and disburse$ent of the new one#
3, R".&%" 3$ E&#*/ P&/1"$%) I If the custo$er $akes earl pa $ent and there is no co$$it$ent fro$ the institution in respect of an discount in the price of Murabaha* than the institution has the sole discretion in allowing the$ the rebate# I It is not reco$$ended to $ake it a practice and $ust be avoided in nor$al course of business# Such issue* if arises* should be brought in the knowledge of Shariah advisor
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4, P"$&*%/ 3$ L&%" P&/1"$%) I 's soon as the Murabaha is e%ecuted* the Murabaha price beco$es a receivable for the 4ank# Hence* an a$ount charged over and above the a$ount will be =iba# I However* it is per$issible to have an undertaking fro$ the custo$er to pa an a$ount of $one or a percentage of the debt to be donated to charitable causes in the event of dela in pa $ent@instal$ents# 5, S-.:"(% M&%%"# 3! M-#&.&+& I Goods $ust e%ist at the ti$e of e%ecution of Murabaha# I Murabaha cannot be done in all co$$odities* e#g# such as currencies* gold* silver# I Murabaha cannot be used for pa ing utilit bills* wages* overhead e%penses* etc# I General rules of sale related to sub-ect $atter $ust be followed ;, P-#(+&)" E5 4"$(" I In order to ensure that the custo$er actuall purchased the assets as clai$ed* the custo$er is re,uired to sub$it asset purchase evidence along with >ffer A 'cceptance# I +he purchase evidence $ust confir$ that the asset purchase took place after the agenc agree$ent# I 'sset purchase $a be in the for$ of Invoices* deliver orders* truck receipts etc# ;, P-#(+&)" E5 4"$(" I In so$e cases* however* it $a be too burdenso$e for the client to sub$it all the invoices as the nu$ber of invoices $a run into hundreds# I 3or e%a$ple* cotton purchases are generall in s$all ,uantities fro$ various sources and hence for each Sub0Murabaha there $a be too $an invoices to sub$it# It is suggested to furnish considerable sa$ple of invoices along with su$$ar of all purchases#
<, D #"(% P&/1"$% $ M-#&.&+& I In $an cases* the disburse$ent is $ade to the custo$er as an agent of the bank# I In order to ensure transparenc of the Murabaha* it is preferable that disburse$ent @ pa $ent be $ade directl to the supplier# =, P#3! % R"(30$ % 3$ $ M-#&.&+& I Generall in Murabaha transaction there are in two stages& I Invest$ent Stage ;'genc to Purchase< I 3inancing Stage ;:eclaration to pa $ent<
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I +he profit for the Murabaha transaction can be recogni5ed after the goods are sold b the bank to the custo$er# >, T#& $ $0 3! C-)%31"#) 7 B&$? )%&!! I Proper training A understanding of is ver i$portant for I 4ank staff dealing with the Murabaha I /usto$ers purchase officers A accounts staff# 1@, P#3(")) 3! M-#&.&+& 4 !!"# !#31 '#34-(% %3 '#34-(% I 'pplication of Murabaha is not si$ple for all products I Its application differs fro$ products to products like Sugar cane Shares 6eather /otton Gas Petrol +herefore the =M@=> dealing with the custo$er needs to understand and define step wise process flow along with the invest$ent approval for each new custo$er@industr
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'4/ Su5uki 'utos is a proprietorship concern* running a vehicle showroo$# +he proprietor purchases cars of different $odels for Su5uki directl fro$ the $anufacturer for further resale in the $arket# +he deliver ti$e varies fro$ 3 $onths to 5 $onths and "!!% pa $ent is advance# I +he client has approached SI46 branch for Murabaha 3acilit a$ounting to +k# 25 $illion for purchase of vehicle# +he Murabaha facilit will be for one ear at a rate of "E% p#a# I Here* the task is to suggest the step wise process flow* docu$entation A calculation involved in the above case# C&)" 1 B P#3(")) F*3C 7%ecution of MM3' and 'genc with '4/ Su5uki 'utos after approval of 6i$it# I '4/ Su5uki 'utos re,uests ;via >rder 3or$< for booking@purchase of vehicles fro$ Su5uki /o worth +k# 25 $ln# I SI46 issue Purchase order along with Pa >rder in favor of Su5uki /o for booking of vehicles# I Lpon co$pletion of the >rder after 5 $onths* Su5uki will inti$ate SI46 along with asset description ;engine@/hassis 8o# etc< SI46 will inti$ate '4/ 'utos about availabilit of vehicles# '4/ autos will sub$it :eclaration ;after 5 $onths< along with Su$$ar Pa $ent Schedule# I SI46 will accept :eclaration and will issue :eliver >rder along with +ransfer 6etter in favor of '4/ 'utos# I >n the due date ;one ear fro$ the date of disburse$ent<* '4/ 'utos will pa the /ontract Price of Murabaha to SI46# /ontract Price F 25 $ln M ;" ? ;k ? 3%<<
Pa $ent of Murabaha price 6u$p su$p pa $ent '$ount due of 3irst ear /ontract price ;Murabaha selling Price< F3-# U$"2-&* I$)%&**1"$%) +k# ""6 $illion +k# ""6 $illion at the end
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3inancing a$ount Profit =ate +enor Pa $ent of Murabaha price '$ount due
+k# "!! $illion +k# "6% per annu$ " ear four une,ual install$ents
+k# . $illion ;F !#"6@.M"!!< at the end of first 3 ,uarters +k# "!. $illion ;F "!!?.< at the end of the last ,uarter /ontract price +k# ""6 $illion
F3-# E2-&* I$)%&**1"$%) 3inancing a$ount Profit =ate +enor Pa $ent of Murabaha price '$ount due /ontract price four e,ual install$ents +k# 2E#55 $illion ;based on nF.* rF.%* PNF"!!< at the end of each ,uarter +k# ""!#2 $illion +k# "!! $illion +k# "6% per annu$ " ear
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;a<
In cases where the bank is likel * at the ti$e of concluding the contract with the client* to obtain a discount on the asset available for sale on the basis of Murabaha or Murabaha to the purchase order* and the discount is in fact received subse,uentl * such discount shall not be considered as revenue for the Isla$ic bank1 instead* the cost of the relevant goods shall be reduced b the a$ount of the discount# /onsideration should be given to the i$pact this will have on both the profits of the current period and future deferred profits# +he discount $a * however* be treated as revenue for the bank if this is decided b the Shariah supervisor board of the Isla$ic bank# Such revenue shall be recogni5ed in the inco$e state$ent#
;b<
Murabaha =eceivables
Short0ter$ or long0ter$ Murabaha receivables shall be recorded at the ti$e of occurrence at their face value# Murabaha receivables are $easured at the end of the financial period at their cash e,uivalent value# +hus* receivables are valued at the a$ount of debt due fro$ the custo$ers at the end of the financial period less an provision for doubtful debts#
Profits =ecognition
Profits of Murabaha or Murabaha to the purchase order are recogni5ed at the ti$e of contracting if the sale is for cash or on credit not e%ceeding the current financial period# Profits of a credit sale which will be paid for either b $eans of one pa $ent due after the current financial period or b install$ents over several future financial periods shall be recogni5ed b using one of the following two $ethods& ;a<
Proportionate allocation of profits over the period of the credit whereb each financial period shall carr its portion of profits irrespective of whether or not cash is received# +his is the preferred $ethod# 's and when the install$ents are received# +his $ethod shall be used based on a decision b the Shariah supervisor board of the bank or* if it is re,uired* b the Supervisor authorities#
;b<
:eferred Profits :eferred profits shall be offset against Murabaha receivables in the state$ent of financial position# 7arl settle$ent with deduction of part of profit :eduction of part of profit at the ti$e of settle$ent& If a client accelerates his pa $ent of one or $ore install$ents prior to the date specified for such pa $ent* the bank $a deduct part of the profit to be agreed upon between the bank and the client at the ti$e of settle$ent# +he deducted
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a$ount shall be credited to the Murabaha receivable account and e%cluded fro$ the profit recogni5ed in respect of the install$ents# :eduction of part of the profit after settle$ent +he sa$e accounting treat$ent applies if the client accelerates his pa $ents one or $ore install$ents prior to the ti$e specified for such pa $ent and the bank did not allow the client a deduction of part of the profit but asked the client to pa the full a$ount and thereafter the bank rei$bursed the client with part of the profit# Procrastination in pa $ent b * or insolvenc of* the client Procrastination: If the client is delin,uent in pa ing his debt install$ents* then an additional a$ount received b the Isla$ic bank fro$ the client as a penalt ;either b $utual agree$ent or b court ruling< shall be treated according to what the Shariah supervisor board of the Isla$ic bank dee$s appropriate either as& a< =evenue to the Isla$ic bank1 or b< 'n allocation to a charit fund# Insolvenc & If it beco$es evident that the clientOs non0pa $ent was due to insolvenc * then the bank cannot ask the client to pa an additional a$ount b wa of penalt #
6'4 P %+ti+%0 E5%m)0e: C%se St!d, # M! %"%&% Investment t$ RT Inte n%ti$n%0# %++$!nting ) $+ess %nd "e&%vi$ $f m$de
4elow is the case stud for the understanding of Murabaha transactions carried out at Social Isla$i 4ank 6i$ited in various scenarios& =+ I8+7=8'+I>8'6 a valued client of Social Isla$i 4ank 6i$ited en-o ing a 4ai0$ua--al revolving li$it facilities of +k# "!#!! lac to doing poultr business based on its own fir$ in Pubail* ga5ipur# 'll the related papers are sub$itted# +he client secured her loan facilit b 36.#2( deci$al lands at 8iler para* Ga5ipur Sadar#the head office approved the proposal #the other details as follows table
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+enure +otal profit on transaction Sale price ;contract price< :ate of disburse$ent to supplier@custo$er :ate of cul$ination of Murabaha transaction :ate of $aturit of Murabaha
>ne ear "!!!!! "!*"!*!!! Panuar !"*2!!) Panuar "5*2!!) :ece$ber 3"* 2!!)
Scenario A-When there is bullet payment of profit and Cost (Principal) at the end of the period: 1D 't the ti$e of pa $ent to the client for the purchase of goods A re,uest the bank to disburse direcl to the part '@c ;but no voucher is found< b the bank the transaction will be accounted for as follows& E&$-&#/ @18 2@@> :r 'dvance against Murabaha ;4@S 'sset side< /r Part 'ccount ;4@S 6iabilit side< "!* !!*!!! "!* !!*!!!
2D 't the C-*1 $&% 3$ 3! M-#&.&+& i#e# at the ti$e of sale of goods to the custo$ers with signing of :eclaration b the bank and the client following entries would be passed& E&$-&#/ 158 2@@> :r :r /r /r Murabaha 3inancing Lnearned Murabaha Profit =eceivable 'dvance against Murabaha :eferred Murabaha Inco$e "!* !!*!!! "!!*!!! "!* !!*!!! "!!*!!!
3D 4ooking of 'ccrual of profitQ "!% fro$ the date of disburse$ent to the date of cul$ination* the following entr would be passed# R;"!* !!*!!! % "!%< % "5 @ 365S&
E&$-&#/ 158 2@@> :r :r /r /r :eferred Murabaha Inco$e Murabaha Profit =eceivable Inco$e on Murabaha 3inancing Lnearned Murabaha Profit =eceivable ."!! ."!! ."!! ."!!
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4D 4ooking of 'ccrual of profitQ "!% for re$aining da s of the $onth* the following entr would be passed# R;"!* !!*!!! % "!%< % "6 @ 365S& E&$-&#/ 318 2@@> :r :eferred Murabaha Inco$e :r Murabaha Profit =eceivable /r Inco$e on Murabaha 3inancing /r Lnearned Murabaha Profit =eceivable .3)! .3)! .3)! .3)!
'nd so on this entr will be passed at the end of 7'/H $onth till $aturit for the accrual of profit# D )(*3)-#" $ B&*&$(" S+""% &) 3$ E&$-&#/ 318 2@@> Murabaha receivable0gross 6ess& :eferred Murabaha Inco$e T"!* !!*!!!0 ;"!* !!*!!!%"!%%3"@365<U Murabaha Profit =eceivable shown in other assets M-#&.&+& F $&$( $0 R"(" 5&.*" ;)"5"!< ;(.)!< 1@@8@@@ ""* !!*!!!
5D >n Maturit of Murabaha transaction i#e# on :ece$ber 3"* 2!!) and at the ti$e of receiving of final pa $ent following entr would be passed& D"("1."# 318 2@@> :r /r /r Part 4ank '@c Murabaha 3inancing Murabaha Profit =eceivable ""* !!*!!! "!* !!*!!! "!!*!!!
Scenario B-In case Declaration is not recei ed on !anuary "#$ %&&' and is recei ed on (ebruary "#$ %&&': "D 't the ti$e of pa $ent to the client for the purchase of goods on behalf of bank or directl to the supplier b the bank the transaction will be accounted for as follows& !anuary &"$ %&&' :r /r 'dvance against Murabaha Pa >rder @ Part 'ccount "!* !!*!!! "!* !!*!!!
O$ E&$-&#/158 2@@>
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6 SIBL EXPERINCE OF MURABAHA INVESTMENT]
)o entry *ould be passed At the end of (irst +onth i,e, !anuary -"$ %&&' 8o entr would be passed for accruals of profit* as :eclaration has not been received fro$ the custo$er.
%) O$ F".#-&#/ 158 2@@>8 at the cul$ination of Murabaha i#e# at the ti$e of sale of goods to the custo$ers with signing of :eclaration b the bank and the client* the following entries would be passed& (ebruary "#$ %&&' :r :r /r /r Murabaha 3inancing Lnearned Murabaha Profit =eceivable 'dvance against Murabaha :eferred Murabaha Inco$e "!* !!*!!! "* !!*!!! "!* !!*!!! "* !!*!!!
3D 4ooking of 'ccrual of profitQ "!% fro$ the date of disburse$ent to the date of cul$ination* the following entr would be passed# R;"!* !!*!!! % "!%< % ;3"?"5<@ 365S& F".#-&#/ 158 2@@> :r :r /r /r :eferred Murabaha Inco$e Murabaha Profit =eceivable Inco$e on Murabaha 3inancing Lnearned Murabaha Profit =eceivable "26!! "26!! "26!! "26!!
4D 4ooking of 'ccrual of profitQ "!% for re$aining da s of the $onth* the following entr would be passed# R;"!* !!*!!! % "!%< % "3 @ 365S&
(ebruary %.$ %&&' Dr :r /r /r :eferred Murabaha Inco$e Murabaha Profit =eceivable Inco$e on Murabaha 3inancing Lnearned Murabaha Profit =eceivable 356! 356! 356! 356!
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6 SIBL EXPERINCE OF MURABAHA INVESTMENT]
'nd so on this entr will be passed at the end of 7'/H $onth till $aturit for the accrual of profit# 8>+7& In case the Murabaha declaration is 8>+ received on the due date* 8> 7ntr would be passed until the declaration is received# Disclosure in Balance Sheet as at (ebruary %.$ %&&' Murabaha receivable0gross ""* !!*!!!
6ess& :eferred Murabaha Inco$e T"!* !!* !!0 ;"!* !!*!!!%"!%% ;3"?2(<@365<U ;(3(.!< Murabaha Profit =eceivable shown in other assets +urabaha (inancin/ 0ecei able ;"6"6!< "&$ &&$&&&
#) >n Maturit of Murabaha transaction i#e# on :ece$ber 3"* 2!!) and at the ti$e of receiving of final pa $ent following entr would be passed& December -"$ %&&' :r /r /r Part 4ank '@c Murabaha 3inancing Murabaha Profit =eceivable "!* !!*!!! )* !!*!!! "* !!*!!!
>n the first date of 2!"!* the client has +k#"!!* !!! principal outstanding# 's profit is forbidden b Shariah to be valid after :ece$ber 3"* 2!!)# +he bank continuing charged profit#
#) 'fter e%piring $aturit of Murabaha transaction i#e# >n :ece$ber 3"* 2!!) and at the ti$e of receiving of final pa $ent on Panuar 3"* 2!"! following entr would be passed& "S1 !A)2A03 &"$ %&"& :r :r /r /r Murabaha 3inancing /o$pensation =eceivable 'dvance against Murabaha :eferred Murabaha co$pensation charged "* !!*!!! "!* !!! "!* !!*!!! "!*!!!
31)% E&$-&#/8 2@1@ :r /r Part 4ank '@c Murabaha 3inancing "!!(33 "* !!*!!!
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[CHAPTER
6 SIBL EXPERINCE OF MURABAHA INVESTMENT]
/r
/o$pensation Inco$e
(33
=est +k )"6E will be given as rebate :r /r =ebate on /o$pensation =eceivable Part '@c )"6E )"6E
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