Product Definition
Murabaha LC is a letter of credit issued by Al Rajhi Bank in favor of the beneficiary (exporter) on behalf of the applicant (importer). Al Rajhi Bank commits and accepts to pay against trade documents drawn in compliance with the letter of credit terms. Al Rajhi Bank’s credit worthiness replaces that of the applicant. Murabaha contracts allow customers to purchase raw materials, capital goods and other consumables from local and international markets.
These goods are first bought by Al Rajhi Bank for its account on orders of the customers by paying cash or through LC as the case may be, and then sold to the customer with profit margin on deferred payment basis. Payments on deferred basis can be made to the bank in instalments or in one lump sum amount.
