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Is a banking transaction conducted by way of Murabahah, which includes the payment of a non-refundable down payment to the original owner in the event of the sale not being completed, considered a permissible Islamic transaction, and is it sufficient to review the contracts and the issuances of the bank's Sharia board to ascertain its permissibility?

1 min readAlso available in العربية

The murabaha (cost-plus financing) is impermissible if it involves a binding contract or a down payment (earnest money) between the buyer (the one ordering the purchase) and the seller (the owner of the commodity). This is because the initial contractual relationship must be between the bank and the owner of the commodity. Once ownership is transferred to the bank, then the murabaha can be conducted with the client. If there was a pre-existing contractual link between the client and the merchant, it must be canceled; otherwise, the contract transforms into usurious financing.

Summarized from the full answer at Ftawy · reviewed Sep 2, 2026

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