An Islamic bank issued a letter of credit (LC)‎ with a usance period of 90 days, with financing through a Murabahah facility for another 90 days

Fatawa Question

An Islamic bank issued a letter of credit (LC) with a usance period of 90 days, with financing through a Murabahah facility for another 90 days. Upon receiving the shipping documents, the bank signed the Murabahah agreement with the customer and delivered the goods to the customer by endorsing the shipping documents in favor of the customer. The customer being a trader, after getting title and possession of the subject goods, sold the same to other buyers. Now, as the payment date to the supplier is close by, the customer has requested the bank to terminate the Murabahah facility and to make payment to the supplier from funds that will be provided by the customer. In order to maintain a good relationship with the customer the bank is willing to accept the customer’s request, especially as the bank did not incur any cost by making any payment to the supplier. Shariah guidance is sought in this regard.

Fatwa

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Publisher

Islamic Finance News

Publication Date

2014-03-19

Country of Publication

Malaysia

Main Subjects

Economics & Business Administration
Islamic Studies

Data Type

Fatawa

Language

English

Record ID

BIM-783576

• APA
• MLA
• AMA