Murabaha as explained, and as a means of financing asset purchases is IDENTICAL to taking a loan out on a fixed rate of interest. Trade is halal but interest is haram. Just because you have labelled this transaction as Murabaha (most lay Muslims are taken in by Arabic terms), doesn't mean it is not Riba'. Proper Murabaha IS trade (cost + profit); merchant buys an asset, takes full possession, and sells it at a profit to a buyer. The current simultaneous transaction of the bank buying the asset (actually paying - the eventual buyer/borrower is negotiating the price and conducting the purchase), and immediately selling it a mark-up, and the buyer (borrower) paying the marked-up price over a period of time. This is a fixed interest loan; doesn't matter what you call it. The bank is not even taking physical possession of the asset, let alone taking the risk of not being able to re-sell it, or re-sell it at the desired margin of profit.
Even if bank takes full possession of the toys they are charging Ahmed the simple interest which we teach kids in grade 5. Biggest proof is that the cost plus value of goods will never be a market rate (i.e. you cant sell that thing at a cost plus value to a random Darel McPherson for 5 rupees more). Not only murabaha is haram its unethical too. I explained it to a Non Muslim friend and he said smiling that this is exactly what interest is.
Exactly. Murabaha as a means of financing asset purchases is IDENTICAL to taking a loan out on a fixed rate of interest. Trade is halal but interest is haram. Just because you have labelled this transaction as Murabaha (most lay Muslims are taken in by Arabic terms), doesn't mean it is not Riba'. Proper Murabaha IS trade (cost + profit); merchant buys an asset, takes full possession, and sells it at a profit to a buyer. The current simultaneous transaction of the bank buying the asset (actually paying - the eventual buyer/borrower is negotiating the price and conducting the purchase), and immediately selling it a mark-up, and the buyer (borrower) paying the marked-up price over a period of time. This is a fixed interest loan; doesn't matter what you call it. The bank is not even taking physical possession of the asset, let alone taking the risk of not being able to re-sell it, or re-sell it at the desired margin of profit.
How is the bank taking risk of ownership, when Ahmed is obligated to purchase the items at a profit to the bank? The risk situation would only occur if Ahmed is at liberty to decide not buy!
The difference between murabaha and a conventional loan is just different wording, at the end the bank takes 5 RS per toy, whether that's specified as 5 RS per toy or 5% on the entire loan, it amounts to the same thing. Whether you call it "profit" or "interest" in this case is irrelevant.
Money does not have variable intrinsic value and is not seen as an asset but rather a currency and you can not ask for a return on your currency unlike an asset, which you can ask for a return on. The video was quite clear that a conventional bank would loan you money (AGAIN MONEY = CURRENCY NOT ASSET) to buy an asset and you have to pay back a return on that money (THE CURRENCY) which can also snowball whereas the nonconventional bank would buy the asset (BUYS AN ASSET NOT A CURRENCY) which has a variable intrinsic value of $100 and then is sold at a markup (DOES NOT MATTER WHAT THE MARKUP IS OR HOW THEY DETERMINED IT JUST AS LONG AS BOTH PARTIES AGREE ON IT) and the buyer pays back the bank. This second part is no different than you going to the store to buy milk and eggs. Do you think you buy your milk and eggs at cost or with a markup that the grocery store keeps? The difference between just going to the store and Murabaha is you are brokering the sale of milk and eggs between the manufacturer and the grocery store and then the sale between the grocery store and you. We don't buy enough to need to make these deals so they are made for us. Here is another example, let's say you have a friend that runs a dealership and you ask him to find you a car for $7,000 and he buys a car from the auction for $5,000 and sells it to you for $7,000. Is that Islamically wrong? No. Let's say you tell your friend you want a car but cannot afford it so your friend says he will buy a car for you and sell it to you and allow you to make payments. He finds that car from the auction and tells you he will sell it to you for $7,000 with 10 monthly payments of $700 and you agree. He buys the car for $5,000 and he sells it to you for $7,000 with 10 payments equaling $7,000. Is this Islamically wrong? No, then when this deal is the same thing except working with a bank why do you expect them to find you something for $5,000 and sell it to you for the same? or even wait 10 months and get their $5,000 10 months later? If you don't expect your dealership friend to find a car for $5,000 and sell it to you for $5,000 or even wait to get the money they put into the car over a period of 10 months (unless you are really great friends) then why do you expect some bank to do it for you? May Allah guide you to understand this better.
according to you, if i give you Rs. 100 loan and in return i take Rs. 105 in 2 months is called Riba, but if i buy anything that you need for Rs.100 and give u for 2 months time and sign a paper to return Rs.105 is not Riba, are you comedy me? =D don't be smart its totally Riba, every loan which gives benefit to the giver is called RIBA..
Do you think the bread and milk you buy at the store are sold without profit? Do you think they sell it at cost? No. So why in the world would the bank buy something and sell it to you at cost and even give you time to pay them? According to you, if you buy a commodity (like a phone, car, home, etc.) and sell it for more it's Riba which shows a clear lack of understanding of Riba and basic financial terms. Money itself does not have variable intrinsic value and asking for a return on your money is called riba. Asking for a return on your car, for example (which has a variable intrinsic value), is allowed. If you still don't get it then that is on you and may Allah guide you to understand it better.
@@PhucNguyen-wz4dq I’ve met so many people who put down Islamic financing but have no issues with conventional financing and justify paying interest by discrediting Islamic financing tools that I have a hard time distinguishing between someone who sincerely doesn’t understand and someone who is purposefully not understanding it. Good luck on your financial journey.
This video explains the concept very clearly. Thank you!
Murabaha as explained, and as a means of financing asset purchases is IDENTICAL to taking a loan out on a fixed rate of interest. Trade is halal but interest is haram. Just because you have labelled this transaction as Murabaha (most lay Muslims are taken in by Arabic terms), doesn't mean it is not Riba'. Proper Murabaha IS trade (cost + profit); merchant buys an asset, takes full possession, and sells it at a profit to a buyer.
The current simultaneous transaction of the bank buying the asset (actually paying - the eventual buyer/borrower is negotiating the price and conducting the purchase), and immediately selling it a mark-up, and the buyer (borrower) paying the marked-up price over a period of time. This is a fixed interest loan; doesn't matter what you call it. The bank is not even taking physical possession of the asset, let alone taking the risk of not being able to re-sell it, or re-sell it at the desired margin of profit.
Even if bank takes full possession of the toys they are charging Ahmed the simple interest which we teach kids in grade 5. Biggest proof is that the cost plus value of goods will never be a market rate (i.e. you cant sell that thing at a cost plus value to a random Darel McPherson for 5 rupees more). Not only murabaha is haram its unethical too. I explained it to a Non Muslim friend and he said smiling that this is exactly what interest is.
Its kind of like price fixing, which is illegal
This is a perfect example of how the technical supercedes the intent as prescribed in the Quran and hadith.
I need assistance on how to establish islamic lending and how much capital we need and what requirement need
Masha Allah! Thank you
The buyer can't be Agent for the bank in islamic perspective.
Really?
Exactly.
Murabaha as a means of financing asset purchases is IDENTICAL to taking a loan out on a fixed rate of interest. Trade is halal but interest is haram. Just because you have labelled this transaction as Murabaha (most lay Muslims are taken in by Arabic terms), doesn't mean it is not Riba'. Proper Murabaha IS trade (cost + profit); merchant buys an asset, takes full possession, and sells it at a profit to a buyer.
The current simultaneous transaction of the bank buying the asset (actually paying - the eventual buyer/borrower is negotiating the price and conducting the purchase), and immediately selling it a mark-up, and the buyer (borrower) paying the marked-up price over a period of time. This is a fixed interest loan; doesn't matter what you call it. The bank is not even taking physical possession of the asset, let alone taking the risk of not being able to re-sell it, or re-sell it at the desired margin of profit.
So what is Murabaha Margin Trading in stock trading? can anyone please explain?
excellent video
Good video. Thanks
Thank You for your valued feedback Nasima.
Please share it across your network to educate them as well.
We need in Tamil Language Also
nice presentation on murabaha trade
Is there anything like it in Canada, please let me know if it exists here Canada thanks
How is the bank taking risk of ownership, when Ahmed is obligated to purchase the items at a profit to the bank? The risk situation would only occur if Ahmed is at liberty to decide not buy!
Masha Allah..
The difference between murabaha and a conventional loan is just different wording, at the end the bank takes 5 RS per toy, whether that's specified as 5 RS per toy or 5% on the entire loan, it amounts to the same thing. Whether you call it "profit" or "interest" in this case is irrelevant.
It's relèvent because one can charge you late fees (interest on interest) the other can't
@@ifizzypop87 doesn't matter still, the cash price and the credit price regardless of when its repaid, has to be the same in islamic trading.
It's based on assets, that's the difference. It has backing.
Money does not have variable intrinsic value and is not seen as an asset but rather a currency and you can not ask for a return on your currency unlike an asset, which you can ask for a return on. The video was quite clear that a conventional bank would loan you money (AGAIN MONEY = CURRENCY NOT ASSET) to buy an asset and you have to pay back a return on that money (THE CURRENCY) which can also snowball whereas the nonconventional bank would buy the asset (BUYS AN ASSET NOT A CURRENCY) which has a variable intrinsic value of $100 and then is sold at a markup (DOES NOT MATTER WHAT THE MARKUP IS OR HOW THEY DETERMINED IT JUST AS LONG AS BOTH PARTIES AGREE ON IT) and the buyer pays back the bank.
This second part is no different than you going to the store to buy milk and eggs. Do you think you buy your milk and eggs at cost or with a markup that the grocery store keeps? The difference between just going to the store and Murabaha is you are brokering the sale of milk and eggs between the manufacturer and the grocery store and then the sale between the grocery store and you. We don't buy enough to need to make these deals so they are made for us.
Here is another example, let's say you have a friend that runs a dealership and you ask him to find you a car for $7,000 and he buys a car from the auction for $5,000 and sells it to you for $7,000. Is that Islamically wrong? No. Let's say you tell your friend you want a car but cannot afford it so your friend says he will buy a car for you and sell it to you and allow you to make payments. He finds that car from the auction and tells you he will sell it to you for $7,000 with 10 monthly payments of $700 and you agree. He buys the car for $5,000 and he sells it to you for $7,000 with 10 payments equaling $7,000. Is this Islamically wrong? No, then when this deal is the same thing except working with a bank why do you expect them to find you something for $5,000 and sell it to you for the same? or even wait 10 months and get their $5,000 10 months later? If you don't expect your dealership friend to find a car for $5,000 and sell it to you for $5,000 or even wait to get the money they put into the car over a period of 10 months (unless you are really great friends) then why do you expect some bank to do it for you? May Allah guide you to understand this better.
what will happen if he can't sell toy will bank make loss?
The bank will not make loss. All the loss (if any) has to be borne by the borrower.
How to establish islamic lending
Ty
the music is very unnecessary but good explanation
Student Uniten hadir!
I couldn't at all focus because of the maher al zain nasheed in the back😂
BETTER THIS VDO WITH TAMIL MEDIUM
according to you, if i give you Rs. 100 loan and in return i take Rs. 105 in 2 months is called Riba, but if i buy anything that you need for Rs.100 and give u for 2 months time and sign a paper to return Rs.105 is not Riba, are you comedy me? =D don't be smart its totally Riba, every loan which gives benefit to the giver is called RIBA..
Do you think the bread and milk you buy at the store are sold without profit? Do you think they sell it at cost? No. So why in the world would the bank buy something and sell it to you at cost and even give you time to pay them? According to you, if you buy a commodity (like a phone, car, home, etc.) and sell it for more it's Riba which shows a clear lack of understanding of Riba and basic financial terms. Money itself does not have variable intrinsic value and asking for a return on your money is called riba. Asking for a return on your car, for example (which has a variable intrinsic value), is allowed. If you still don't get it then that is on you and may Allah guide you to understand it better.
@@HMJKS2000 thanks for your explanations, I'm studying about Islamic finance and have had a difficult time getting to understand the system.
@@PhucNguyen-wz4dq No worries
@@PhucNguyen-wz4dq I’ve met so many people who put down Islamic financing but have no issues with conventional financing and justify paying interest by discrediting Islamic financing tools that I have a hard time distinguishing between someone who sincerely doesn’t understand and someone who is purposefully not understanding it. Good luck on your financial journey.
Thats a very very thin line dude!
Good video but repetitive music is really annoying!!!
Weird music
Very common within the Muslim community