Murabaha (Cost-Plus Financing)

Overview
Murabaha is one of the most widely used Shariah-compliant financing products in Islamic finance. It is a cost-plus sale contract in which Lamen Microfinance Institution (LMI) purchases goods or assets requested by the client and sells them to the client at a pre-agreed price that includes the original purchase cost plus a disclosed profit margin. Unlike conventional loans, Murabaha is based on the sale of tangible assets rather than lending money with interest. The selling price is fixed at the time of the agreement, and the client repays it through convenient instalments over an agreed period.

How Murabaha Works

• The client identifies the goods or assets required for personal or business purposes.
• The client submits a financing request to LMI.
• LMI evaluates the application in accordance with its financing policies and Shariah principles.
• Upon approval, LMI purchases the requested goods from the supplier.
• Ownership of the goods is transferred to LMI before they are sold to the client.
• LMI sells the goods to the client at a pre-agreed price that includes the acquisition cost and a disclosed profit margin.
• The client pays the agreed selling price through fixed instalments over the financing period.

Key Features

• Fully Shariah-compliant financing
• Interest-free financing structure
• Asset-based financing
• Transparent cost and profit disclosure
• Fixed selling price throughout the financing period
• Flexible repayment schedules
• No hidden charges
• Ethical and responsible financing
• Suitable for productive economic activities

Eligible Financing Purposes

LMI's Murabaha financing can be used to purchase a wide range of productive assets, including:

• Agricultural inputs (seeds, fertilizers, farming equipment)
• Livestock and animal husbandry equipment
• Commercial inventory and merchandise
• Machinery and production equipment
• Retail and wholesale business goods
• Office furniture and equipment
• Information technology equipment
• Renewable energy solutions, including solar systems
• Vehicles used for business purposes
• Other Shariah-compliant productive assets

Suitable For

Murabaha financing is ideal for:

• Micro, Small and Medium Enterprises (MSMEs)
• Farmers and agricultural producers
• Traders and merchants
• Retail and wholesale businesses
• Manufacturing enterprises
• Service providers
• Women entrepreneurs
• Youth entrepreneurs
• Start-up businesses
• Existing businesses seeking expansion

Benefits

• Access to financing without interest (Riba)
• Transparent and predictable payment obligations
• Supports business growth and income generation
• Promotes ethical and responsible financing
• Helps entrepreneurs acquire productive assets
• Encourages sustainable economic development
• Strengthens financial inclusion
• Provides certainty through fixed repayment amounts

Why Choose Murabaha Financing at LMI?

Lamen Microfinance Institution delivers Murabaha financing in accordance with internationally recognized Islamic finance principles and best practices. Every transaction is conducted with transparency, fairness, and full Shariah compliance, ensuring that clients receive ethical financial solutions tailored to their business and livelihood needs. Our experienced financing professionals provide personalized guidance throughout the financing process, enabling clients to invest confidently, expand their businesses, and improve their economic well-being.