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Subject : Ruling on Murabaha Transaction in Trust Funds of the Ministry of Social Development

Fatwa Number : 552

Date : 18-03-2010

Classified : Current Financial Issues

Fatwa Type : Search Fatawaa

Question :

What is the ruling of Sharia on Murabaha transaction in the trust funds of the Ministry of Social Development?

The Answer :

All perfect praise be to Allah the Lord of the Worlds. May His peace and blessings be upon our Prophet Mohammad and upon all his family and companions.


Having reviewed the instructions of the trust funds management in the Ministry of Social Development, it was made clear to us (Iftaa` Department) that article (14) of the trust funds system stipulates the adoption of Islamic *Murabaha upon granting the loans via the funds. Thus, it isn`t permissible to hand any cash amounts.

Murabaha sale transaction is permissible when it meets the conditions stipulated in Sharia in this regard. As for judging the mechanism through which the trust fund operates, it is imperative to structure a Murabaha sale contract according to the regulations of Sharia to govern the work mechanism between the trust fund and those dealing with it. And Allah The Almighty Knows Best.

*Murabaha, also referred to as cost-plus financing, is an Islamic financing structure in which the seller and buyer agree to the cost and markup of an asset. The markup takes place of interest, which is illegal in Islamic law





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