The questioner referred to the Credit Committee meeting held on 19th January 1987 with Dr. Abdul Sattar Abu Ghuddah to study some Shari'ah issues relevant to the management of credit. The Fatwa Committee has adopted an approach based upon a new concept regarding granting of credit facilities to customers by having them secured by the mortgage of goods stored in KFH’s warehouses or the customer’s own warehouses with KFH’s supervision. Based upon the Shari'ah supervisor’s explanation, please clarify for us the fiqh characterization of the following:
The Credit Committee is willing to grant credit facilities to a number of customers, by having them secured by the mortgage of goods stored in KFH’s warehouses or the customer’s own warehouses with KFH’s supervision. KFH imports the goods on its own behalf based on the customer’s promise to buy these goods, as per the established practice, and the contract of sale is signed upon the arrival of the goods. The price (with added profit) is paid by a single payment after a year. At the same time, the customer mortgages these goods to KFH by a possessory mortgage. As soon as the mortgaging process is complete, KFH delivers to him a certain percentage of the goods (e.g. 25%). The rest of the goods are kept under KFH’s supervision, and the customer is not allowed to take any portion of them without the permission of KFH.
If the customer pays the price of the delivered 25%, a certain percentage is deducted from the price. Eventually, when all the goods are delivered to the customer, he will have paid, let’s say, 70% of the value of the cheque taken from him at the time that the sale contract was concluded, and which will be receivable at the end of the year. This means that KFH will deduct only the remaining 30% on the due date.
Is this still considered a murabahah sale, or does it have another name?
It is allowed for KFH to enter into such a deal in which customers promise to purchase goods through deferred purchase and mortgage them against the deferred price for a certain period. The mortgage is partly dissolved according to the amounts paid during this period. This is the case for a deferred-payment sale. However, if the payment is not deferred, KFH has the right to retain the sold goods and then release them as the price is paid, in part or in full.
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