Abstract
Murhabahah is one of the most used financing modes in Islamic financial services. This case
provides a detailed account of execution of murabahah financing for Small and Medium
Enterprise (SME) dealing in general supplies. Murabahah is cost-plus sale, where the Islamic
Bank purchased generals supplies from Lahore and Karachi markets and sold the same to the
Small and Medium Enterprise (SME) in Peshawar at a cost-plus price receivable to the Bank
in six months. The management of the bank scrutinised the client’s application for murabahah
financing to mitigate different types of risk exposures such as late payments to suppliers in the
past. In addition, a customised process flow was designed to ensure smooth flow of process in
compliance with Shariah. The case reveals a pragmatic 42 steps long process of how
murabahah implementation happens for SMEs in local market, which extend our
understanding in terms of identifying micro processes that happened in the murabahah
implementation, which are usually missed by the abstract theory on murabahah.
Keywords: Murabahah, financing, small and medium enterprise (SME)
Karim Ullah, Shafiullah Jan, Waqar Hussain Shah. (2018) Murabahah Financing for a Small Medium Enterprise (SME), Journal of Independent Studies and Research-Management, Social Sciences and Economics, Volume-16, Issue-1.
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