KCB Group CEO Joshua Oigara speaks during the launch of the Islamic banking at Hilton Hotel in Nairobi April 9, 2015. The holy month of Ramadhan offers an opportunity to consider the essence of Islamic banking. PHOTO | SALATON NJAU | NATION MEDIA GROUP
Murabaha is a trade-based model of deferred payment sale used for personal, home, motor vehicle, and trade financing.
The parties to a murabaha contract are the bank that provides the funds, the customer who needs the product, and the vendor of the product.
The contract between the bank and the vendor is quite independent of the sale contract between the bank and the customer.
The holy month of Ramadhan offers an opportunity to consider the essence of Islamic banking, which operates on the basis of contracts that are deemed legal and lawful, according to the sharia standards on the condition that these contracts are free from any prohibition.
Some of the prohibitions include the provision of interest, popularly known as riba, financing of non-permissible activities, speculative, and excessively risky activities.
