An Islamic bank is facing an interesting situation. A customer previously requested financing for the purchase of a vehicle from the bank

Fatawa Question

An Islamic bank is facing an interesting situation. A customer previously requested financing for the purchase of a vehicle from the bank. The bank had purchased the vehicle from a dealer and sold it to the customer by way of Murabahah with payment to be made by the customer on a deferred installment basis. After six months and while the vehicle was still under warranty, the customer claimed that he had discovered a technical fault in the vehicle, which the dealer could not repair due to non-availability of a critical part with the dealer or manufacturer. At the customer’s request, the bank took up the matter with the dealer who agreed to take back the vehicle and to return the purchase price paid by the bank in full. As the vehicle was sold by the bank to the customer under a Murabahah contract with the sale price being paid on a deferred basis in installments, the Shariah board of the bank has been requested to provide guidance on the following : How to unwind the subject Murabahah transaction, as the vehicle cannot be repaired; The treatment to bank’s profit component with respect to the extent of the sale price paid by the customer during six-month period.

Fatwa

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Publisher

Islamic Finance News

Publication Date

2013-12-11

Country of Publication

Malaysia

Main Subjects

Economics & Business Administration
Islamic Studies

Data Type

Fatawa

Language

English

Record ID

BIM-783596

• APA
• MLA
• AMA