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Concept Tawwaruq

The document describes the mechanics of a Tawarruq financing product from a bank. The bank buys a commodity from a broker using Murabahah financing and then sells it to the customer at a markup under the same contract. Using Wakalah, the customer then appoints the bank as an agent to sell the commodity to another broker, and the proceeds from that sale are credited to the customer's account. The customer then pays the bank back over installments based on the principal plus profit pricing from the original Murabahah sale.

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ZulaihaAmaria
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72 views

Concept Tawwaruq

The document describes the mechanics of a Tawarruq financing product from a bank. The bank buys a commodity from a broker using Murabahah financing and then sells it to the customer at a markup under the same contract. Using Wakalah, the customer then appoints the bank as an agent to sell the commodity to another broker, and the proceeds from that sale are credited to the customer's account. The customer then pays the bank back over installments based on the principal plus profit pricing from the original Murabahah sale.

Uploaded by

ZulaihaAmaria
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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10/12/2014

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Shariah Concept
Shariah Concept : Tawarruq
Shariah Contracts : Bai' Murabahah, Wakalah
Mechanics (Modus Operandi) Of The Product
1. Product Structure Diagram

2. Step by Step Process Flow of the Product
The customer applies financing product based on Tawarruq concept from the Bank. Bank obtains
Tawarruq transaction documents from the customer.
Bank will buy the commodity at London Metal Exchange (LME) through Broker 1.
Under the Murabahah contract, Bank then sells the commodity to the customer at Banks Selling Price
(Principle + Profit) on deferred payment term.
Under the Wakalah contract, customer requests Bank to sell the commodity in the market.
Acting as the appointed sale agent for the customer, Bank sells the commodity to Broker 2.
Bank then credits the Wariq (proceed) from the sale of commodity to the customers account.
Finally, customer pays amount due to the Bank (Principal + Profit) by way of agreed instalment method.

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