Murabaha is a trade contract for the sale of an item on cost of good plus mark-up whereby the seller is obliged to disclose to the buyer the cost of goods sold and a margin of profit included in the sale price of goods agreed to be sold. The contract is normally done on deferred payment basis. Murabaha can be repaid up to a period of 6 years at KCB.
Applications
Asset-Backed Financing
For purchase of assets such as vehicles, machinery, stock, etc.
Construction Murabaha
For purchase of building materials.
Working Capital Murabaha
To meet various working capital needs which involve purchase and resale of specific items.
How it works*
- The customer approaches KCB in need of goods. KCB buys those goods from third party (Vendor) OR appoints the customer as the bank's agent to procure those goods on bank's behalf and deliver the goods to the bank.
- The bank enters a sales contract with the customer to sell the goods to them on cost plus basis i.e. cost of goods plus a profit margin agreed beforehand.
- The payment can be made on spot or on a deferred basis and the cost must be disclosed to the customer by KCB.
