(5-6) Solutions to settle the Murabaha Debt

(5-6) Solutions to settle the Murabaha Debt

Question (1):

Some clients often are delinquent in the payment of installments of the Murabaha, the value of the Murabaha rate for such clients may

be 9% and due to repeated delinquency in payments we want to increase the rate of Murabaha in future deals. Is it Shariah permissible?.

Considering that no increase in the price of Murabaha would be effected if those clients were committed to paying on time?

Answer:

There is no objection in terms of Shariah opinion to request more profit upon conclusion of a new contract with the client who had delayed in payment of a previous Murabaha transaction, without specification of the details of the increase in the amount and without any written or oral agreement regarding such action because the subject matter is the mutual consent to be reached on There is no objection in terms of Shariah opinion to request more profit upon conclusion of a new contract with the client who had delayed in payment of a previous Murabaha transaction, without specification of the details of the increase in the amount and without any written or oral agreement regarding such action because the subject matter is the mutual consent to be reached on

Source:

Kuwait Finance House, Book of Fatwas on Economic Issues, part (1), and (2), Fatwa No. (111).

Question (2):

Is it permissible to terminate the arrears of Murabaha debt?

Answer:

First: If the buyer did not pay the due debt in pursuant of the Murabaha transaction at due date then the bank is permitted to purchase the item that it has sold to him under the Murabaha or any part of it at a current price to be receivable by the Bank, if a period of time has passed after the sale of Murabaha as prices typically vary depending on the commodity, (this is the so-called by scholars markets' assignment). However, this should not be considered as prohibited Ayna. With this purchase the bank could satisfy First: If the buyer did not pay the due debt in pursuant of the Murabaha transaction at due date then the bank is permitted to purchase the item that it has sold to him under the Murabaha or any part of it at a current price to be receivable by the Bank, if a period of time has passed after the sale of Murabaha as prices typically vary depending on the commodity, (this is the so-called by scholars markets' assignment). However, this should not be considered as prohibited Ayna. With this purchase the bank could satisfy

Second: The bank then has the right to dispose of the goods or equipment or assets purchased from the customer as it deems the best to achieve its interests either with the same the customer or others in accordance with Shariah permissible modes, such as Musharaka (Partnership) Mudharaba based on their own requirements and conditions or through normal rent or lease ending in ownership provided that the bank should not resale them in credit to the customer at a price more than the price of purchasing, since this is considered as reversal of Ayna that is called (exchanging of debt with another debt), which is Shariah prohibited.

Third: It is impermissible to reschedule the debts of Murabaha or other debts by increasing the amount and the term of debt.

Source:

Dallah Al-Barakah Group, Development and Research Department, Resolutions & Recommendations of AlBaraka Symposia on the Islamic Economy, (The First, Second and Third Seminar), fatwa No. (5).

(6)

Rules of Promise to Purchase and sell in