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COMMMODITIES MURABAHA

COMMMODITIES MURABAHA

What is the definition of commodities Murabaha)

Commodity Murabaha (often called “tawarruq”) is by definition a Shariah-compliant way to create cash financing or a fixed-profit investment by routing the transaction through a real, tradeable commodity instead of an interest-bearing loan.

In commodity Murabaha, banks use widely traded commodities (e.g., metals) to ensure there is a genuine purchase and sale: the economic aim (cash today, pay more later) is achieved through trade, not lending with interest.

For financing, the typical steps are: (1) the bank buys a commodity spot from Broker A and takes title/possession (often constructively, via warehouse certificates); (2) the bank sells that commodity to the business on deferred murabaha terms at cost + disclosed profit; (3) the business immediately sells the commodity spot to Broker B (or appoints the bank as its agent to do so) and receives cash; (4) the business repays the bank the deferred price in instalments.

Businesses value commodity murabaha because it delivers predictable, invoice-like cashflows for working capital and deposits, scales from short tenors (1–12 months) to multi-year, and can price off familiar benchmarks (e.g., SONIA/SOFR + a fixed profit, embedded into the sale price) while staying interest-free in form and substance.

What type of commodities murabaha are available ?

Here’s a practical map of the main types of commodity murabaha (tawarruq) you’ll see in the market—grouped by purpose, execution, and structure.

By purpose:
Financing (tawarruq) = borrower gets cash now, repays a fixed murabaha price over time.
Investment (“reverse” murabaha) = depositor places cash, earns fixed profit at maturity.

By execution:
Exchange/platform (warehouse receipts, strong audit trail) or OTC brokers (flexible sizes/timing). Usually constructive possession; physical delivery optional.

By structure:
Agency (wakālah) vs principal-to-principal trading; single fixed term vs rolling short murabahas (to mirror SONIA/SOFR resets); classical vs organized workflows (always avoid buy-back from same counterparty).

By use case:
Working capital, trade/invoice settlement, term funding (capex), interbank/treasury placements.

By commodity:
Widely traded base metals/softs with clear title docs; generally avoid gold/silver (ṣarf rules). Key test: real ownership & risk transfer.

By governance rigor:
Standard pack (agency + promise + murabaha + confirms) vs enhanced controls (dual brokers, strict cut-offs, extra audit trails).

Where can I obtain a commodities murabaha facility for my business ?

Here’s a country-by-country list of banks and institutions that provide Commodity Murabaha facilities:

United Arab Emirates (UAE)

  • Ajman Bank
  • Sharjah Islamic Bank (SIB) – in cooperation with DMCC Tradeflow
  • First Abu Dhabi Bank (FAB)
  • Dubai Islamic Bank
  • Abu Dhabi Islamic Bank (ADIB)

Saudi Arabia

  • Al Rajhi Bank
  • Bank AlJazira
  • Saudi National Bank (SNB, Islamic division)

Qatar

  • Qatar Islamic Bank (QIB)
  • Masraf Al Rayan
  • Qatar International Islamic Bank (QIIB)

Kuwait

  • Kuwait Finance House (KFH)
  • Boubyan Bank

Bahrain

  • Al Baraka Banking Group
  • Ithmaar Bank

Oman

  • Bank Nizwa
  • Alizz Islamic Bank

Malaysia

  • Maybank Islamic
  • CIMB Islamic
  • Bank Islam Malaysia
  • RHB Islamic

Turkey

  • Kuveyt Türk Participation Bank
  • Albaraka Türk
  • Türkiye Finans

Pakistan

  • Meezan Bank
  • Bank Islami Pakistan
  • Dubai Islamic Bank Pakistan

United Kingdom

  • Al Rayan Bank
  • QNB London (Qatar National Bank)
  • Abu Dhabi Islamic Bank UK (corporate desk)
  • Gatehouse Bank

Kazakhstan

  • ADCB Kazakhstan (Abu Dhabi Commercial Bank)

Africa

  • Nigeria: Jaiz Bank
  • Kenya: Gulf African Bank, First Community Bank
  • Tunisia: Banque Zitouna
  • Côte d’Ivoire & Pan-Africa: Africa Finance Corporation (AFC – commodity Murabaha facilities for infrastructure)

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