MUSAWAMAH
ISLAMIC BANKING
Musawamah
• It is a sale on agreed price without
referring to the first price on which the
seller has purchased.
• Negotiation of selling rate
• No Obligation to reveal other cost
• Musawamah is the most common type of
trade.
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• It involves a transaction where the selling
price of a good or service is a process of
negotiation between the seller and the
buyer.
• And the buyer being unaware of the actual
cost.
• It should not be used in order to gain excess
profit from an item.
• Price based on bargaining skills.
Musawamah is much different
then another Islamic Finance
transaction Murabaha, where
the buyer knows the cost of the
item.
In order to follow shariah law, there are
three specific restrictions that exist:
1
The product, property or service must be owned entirely by
the seller at the time of sale.
2
The item must be useable and valuable in some way and in
good condition.
3
The sale must take place when the item is traded, not any
other time in the future. Any sale made later is void and null.
Thank You