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C. Determining the Profit-Margin
Albaraka bank uses the “Albaraka Profit Mark-up” as its benchmark. This benchmark is reviewed quarterly by the Board Credit Committee and the decision
is communicated to all stakeholders. The benchmark does not only follow the fluctuation of the interest prime rate but will be determined by internal and
external factors affecting Albaraka bank. Some of the factors will be:
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1. Laws and regulations of South Africa 2. The cash flows of Albaraka bank as well as external stakeholders.
3. The market conditions 4. Stability at Albaraka bank
5. Competition 6. Uncertain future circumstances
7. Supply and demand for funds. 8. Inflation
9. Domestic and national savings 10. The return the bank wishes for its depositors as well for itself
The responsibility of determining the benchmark is entrusted upon the Assets and Liability committee ALCO
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of Albaraka Bank.
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Interview with Mr Nazeem Abdurahmaan, Senior Consultant at Albaraka Bank South Africa, 03 December 2010
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Or an internal”Assets and Liabilities Committee,” which is normally established in most banks.
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The Albaraka Profit Mark-up benchmark once determined for implementation is publicized for the benefit of internal use as well as for
the public. Clients requesting that Albaraka bank follows the prime rate will be
educated on the nature of an Islamic transaction and the benefits thereof.
D. Nominating an agent or representatives Wakalah
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Albaraka bank and the consumer will firstly enter into an overall agreement whereby the bank promises to sell and the client promises to buy the
asset at an agreed profit mark-up. This agreement is to provide assurance that the customer will complete the transaction after the item has been acquired by the
bank 1. Albaraka bank then appoints the client as his agent for purchasing the asset on
its behalf and an agency agreement is signed by both parties. 2. The client purchases the commodity on behalf of the bank as an agent of the
bank. 3.
The client informs the bank that he has purchased the asset on the bank‟s behalf and at the same time makes an offer to purchase it from the bank.
4. Albaraka bank accepts the offer and the sale is concluded whereby the ownership as well as the risk of the commodity is transferred to the client.
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Interview with Mr Nazeem Abdurahmaan, Senior Islamic Financial Consultant at Albaraka Bank South Africa on the 03 December 2010
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E. The Tax applied on murabaha
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