An Islamic bank has a standard auto finance product for its customers. The product is based on the Murabahah structure under which the Islamic bank purchases the vehicle from the dealer and sells it to the customer on its cost

Fatawa Question

An Islamic bank has a standard auto finance product for its customers. The product is based on the Murabahah structure under which the Islamic bank purchases the vehicle from the dealer and sells it to the customer on its cost plus profit on an agreed deferred payment. In order to secure the Murabahah debt, the Islamic bank seeks from the customer to allow mortgage on the vehicle until all the installments are paid. In relation to the mortgage, Shariah guidance is sought on the following two aspects : Will the Islamic bank be considered as an owner of that vehicle since it is mortgaged to it ? Can the Islamic bank claim its ownership on the mortgaged vehicle in case of default and if so, to what extent ?

Fatwa

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Publisher

Islamic Finance News

Publication Date

2015-06-10

Country of Publication

Malaysia

Main Subjects

Economics & Business Administration
Islamic Studies

Data Type

Fatawa

Language

English

Record ID

BIM-783014

• APA
• MLA
• AMA