Murabaha Certificates (Sukuk) A Suitable Funding Instrument for Islamic Finance and Capital Market

Murabaha is defined as a particular kind of sale contract where the seller
expressly discloses to the buyer the cost he has incurred on the commodities
including purchase price, transport and storage costs, and sells it to him by
adding some profit or mark-up thereon. Murabaha sale contract can be
concluded in cash or on deferred payment basis. Normally, the profit margin
in deferred payment basis is more.
Recently Muslim scholars, in order to fill the vacuum of omitted loan
certificates, have benefited from the features of Murabaha sale and embarked
on designing bonds called Murabaha certificates which can be an appropriate
supplement to Islamic asset and capital market for financing and as an
instrument of the asset policy.
Murabaha certificates can be designed in different forms some of the most
important of which are:
1) Murabaha certificates for financing;
2) Murabaha certificates for meeting cash requirements;
3) Murabaha certificates for building assets of trade companies;
4) Collateral Murabaha certificates for turning into bonds the
demands of banks and leasing institutes.
In this article, Murabaha certificates are examined in terms of compliance
with Shari’ah laws and economic standards. It has been demonstrated that
the first and fourth type of Murabaha certificates are allowed only as per
Shiite’s famous jurisprudence (fiqh) and can therefore be applied within the
country (Iran). As for the third type, it complies with both Shiite as well as
Sunni jurisprudence and can be applied in Iran and in the international level.
The second type is faced with a serious jurisprudential problem and cannot
therefore be publicized.