DECISION NO: 18 Making Discount In The Term Loan Arising From Murabaha Agreements

DECISION OF TKBB ADVISORY BOARD

DECISION DATE : 04.10.2019
DECISION NO : 18
DECISION SUBJECT : Making Discount In The Term Loan Arising From Murabaha Agreements

REFERENCE

REQUEST DATE : 20.09.2019
REQUEST NO : 63862138-622-E.22
REQUEST SUBJECT : Loan Restructuring
REQUESTOR : TKBB-Retail Customer Arbitration Board

REQUEST SUMMARY:

Examining the request of making a discount on the term loan of the participation bank customer arising from a murabaha agreement according to the new conditions in the market and stating the opinion of the Advisory Board.

DECISION:

It is permissible for the participation bank to make a discount in its receivables arising from murabaha transactions in favour of the debtor. However, since the sales price is clearly determined with the consent of the parties in a sales contract, it is not obliged to make the discount.

Legitimacy:

Murabaha is a kind of sales contract and it is essential to complete the contract over the price which is clearly determined with the consent of the parties. If the debt arising from this contract will be paid in advance, it must be paid immediately, or if it is to be paid in terms, it must be paid on the maturity. However, the creditor can release the debtor by waiving some or all of its receivables in favour of the customer. But the creditor is never obliged to take legal action that means partially or completely waiving its receivables. As a result, it does not contradict the Islamic law principles if the participation bank makes a discount or does not make a discount on its receivables.

Allah knows the best.