What is the definition of commodities Murabaha)
Commodity Murabaha (often called “tawarruq”) is by definition a Shariah-compliant way to create cash financing or a fixed-profit investment by routing the transaction through a real, tradeable commodity instead of an interest-bearing loan.
In commodity Murabaha, banks use widely traded commodities (e.g., metals) to ensure there is a genuine purchase and sale: the economic aim (cash today, pay more later) is achieved through trade, not lending with interest.
For financing, the typical steps are: (1) the bank buys a commodity spot from Broker A and takes title/possession (often constructively, via warehouse certificates); (2) the bank sells that commodity to the business on deferred murabaha terms at cost + disclosed profit; (3) the business immediately sells the commodity spot to Broker B (or appoints the bank as its agent to do so) and receives cash; (4) the business repays the bank the deferred price in instalments.
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Businesses value commodity murabaha because it delivers predictable, invoice-like cashflows for working capital and deposits, scales from short tenors (1–12 months) to multi-year, and can price off familiar benchmarks (e.g., SONIA/SOFR + a fixed profit, embedded into the sale price) while staying interest-free in form and substance.
What type of commodities murabaha are available ?
Here’s a practical map of the main types of commodity murabaha (tawarruq) you’ll see in the market—grouped by purpose, execution, and structure.
By purpose:
Financing (tawarruq) = borrower gets cash now, repays a fixed murabaha price over time.
Investment (“reverse” murabaha) = depositor places cash, earns fixed profit at maturity.
By execution:
Exchange/platform (warehouse receipts, strong audit trail) or OTC brokers (flexible sizes/timing). Usually constructive possession; physical delivery optional.
By structure:
Agency (wakālah) vs principal-to-principal trading; single fixed term vs rolling short murabahas (to mirror SONIA/SOFR resets); classical vs organized workflows (always avoid buy-back from same counterparty).
By use case:
Working capital, trade/invoice settlement, term funding (capex), interbank/treasury placements.
By commodity:
Widely traded base metals/softs with clear title docs; generally avoid gold/silver (ṣarf rules). Key test: real ownership & risk transfer.
By governance rigor:
Standard pack (agency + promise + murabaha + confirms) vs enhanced controls (dual brokers, strict cut-offs, extra audit trails).
Where can I obtain a commodities murabaha facility for my business ?
Here’s a country-by-country list of banks and institutions that provide Commodity Murabaha facilities:
United Arab Emirates (UAE)
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- Ajman Bank
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- Sharjah Islamic Bank (SIB) – in cooperation with DMCC Tradeflow
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- First Abu Dhabi Bank (FAB)
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- Dubai Islamic Bank
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- Abu Dhabi Islamic Bank (ADIB)
Saudi Arabia
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- Al Rajhi Bank
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- Bank AlJazira
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- Saudi National Bank (SNB, Islamic division)
Qatar
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- Qatar Islamic Bank (QIB)
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- Masraf Al Rayan
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- Qatar International Islamic Bank (QIIB)
Kuwait
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- Kuwait Finance House (KFH)
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- Boubyan Bank
Bahrain
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- Al Baraka Banking Group
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- Ithmaar Bank
Oman
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- Bank Nizwa
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- Alizz Islamic Bank
Malaysia
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- Maybank Islamic
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- CIMB Islamic
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- Bank Islam Malaysia
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- RHB Islamic
Turkey
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- Kuveyt Türk Participation Bank
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- Albaraka Türk
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- Türkiye Finans
Pakistan
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- Meezan Bank
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- Bank Islami Pakistan
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- Dubai Islamic Bank Pakistan
United Kingdom
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- Al Rayan Bank
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- QNB London (Qatar National Bank)
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- Abu Dhabi Islamic Bank UK (corporate desk)
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- Gatehouse Bank
Kazakhstan
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- ADCB Kazakhstan (Abu Dhabi Commercial Bank)
Africa
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- Nigeria: Jaiz Bank
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- Kenya: Gulf African Bank, First Community Bank
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- Tunisia: Banque Zitouna
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- Côte d’Ivoire & Pan-Africa: Africa Finance Corporation (AFC – commodity Murabaha facilities for infrastructure)