What is the ruling on the action of a father who bought merchandise for a man, then bought it from him at a profit, and then sold it to people, and is comparing this to what Islamic banks do correct?

The transaction described is most akin to "reverse murabaha," which has not gained acceptance among many contemporary scholars due to its inclusion of the شبهة (element of doubt/suspicion) of 'inah (buy-back sale) and organized tawaruq (monetization transaction).

However, given the lack of a prior agreement between the father and his associate, this transaction is considered a form of partnership (sharika) or mudarabah (profit-sharing).

The following points must be noted:

1. Determining the Profit Ratio: There must be an agreement on a specific percentage of the profits for each partner. 2. Permission from the Capital Owner for Sale: The merchant (agent) is not permitted to sell the goods on credit to himself for less than the market price unless there is explicit permission from the capital owner. 3. Loss: Losses are borne according to each partner's share in the company's capital. 4. Determining Profit: It is not permissible for a specific, known amount of profit to be stipulated for any of the partners; otherwise, the partnership becomes void.