Muzn Trade Finance offers a Shari’a compliant facility to aid your business growth plans.

Is your business looking for Shari’a compliant solutions to increase imports? Muzn Islamic Banking Trade Finance solutions are your ideal Shari’a compliant option. Muzn Islamic Trade Finance is based on commitment of Wakala and Murabaha contracts.

The Murabaha agreement distinguishes itself from conventional finance, whereby once the sale is executed, the selling price cannot be changed. The facility guides customers in importing assets for use in Shari’a compliant businesses. 

Letter of Credit

The Bank offers Trade Finance under Letter of Credit (LC) Murabaha facilities. Customers can pay the agreed Murabaha price as a lump sum, in installments, or a combination of both, based on the mutual agreement with the Bank. Customers are able to use the LC Murabaha facility by making a promise/undertaking to purchase the assets, and through an Agency Agreement select and arrange to purchase the goods for the Bank. The Bank then makes the payment to the supplier, obtains the physical or constructive possession of goods and sells the goods to the customer through the Murabaha agreement. 

Basic conditions of the Murabaha facilities:

  • The form of agency comprises of any act that is a delegation of the right to act on behalf of the other person or entity. For the purpose of this product, the agency shall be a conditional agency for the purchase of specific goods required for the customers’ business.
  • The subject matter of the agency shall be the transaction, for example, the import of goods for which the agent is appointed.
  • Under a Murabaha transaction, the seller or its agent purchases an asset from the manufacturer or dealer, and sells the same to a customer on a cost-plus profit basis.
  • The seller (Bank) must own an asset as an actual or constructive possession before the asset can be sold to a customer. The seller therefore assumes the risks and rewards associated with ownership during the period between the time of purchase of the asset, and the time of sale to the customer. 

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