Murabaha LC l Commercial & Corporate Islamic Banking l United Arab Bank

Murabaha LC(Relaunching soon)

This product follows the Islamic concept “Murabaha”. Murabaha is defined as a purchase & sale transaction wherein the first party (financing party) purchases, on the basis of a prior undertaking from the customer (the purchasing party) called Promise to Purchase, the asset subject as per the Murabaha contract. Then, it possesses it to resell it to the customer at its cost plus a profit margin agreed upon in the Promise.

The customer requests the bank to open, in the bank’s name, an irrevocable LC to receive all documents representing and evidencing title and possession of the described goods in accordance with the terms set out for the LC. This will be against the customer’s promise to purchase the same imported assets/goods. When the customer approaches the bank for purchase of the assets/goods imported, the bank and the customer sign the Murabaha contract in line with the pre-agreed terms and condition and settle the Cost of Goods Purchased and create Receivables under sold goods/assets.

The issuance of LC is considered as a service being provided by the bank against fees and service charges. Upon receipt of documents and retirement of the letter of credit, the LC transaction is reversed and the payment is effected by the bank to the supplier by debiting the Cost of Goods Purchased.

Talk to us

TALK TO US TODAY

You can reach us using any of the following numbers

UAB Toll Free	800 474
International callers	+971 6 5987332
Sadara Toll Free	800 72 32 72
Sadara international	+971 6 5987333

welcome to UAB live

Please give us a few details and allow us to help you better

captcha