The bank must own the commodity for the muraabahah to be valid

2-2-2014 | IslamWeb

Question:

What is the ruling on the following form of Muraabahah: I require the bank to buy a car for me, and it asks me to bring a statement indicating the cash price of the car from an agency. After agreement over the premiums, the duration, and the rate of interest, the bank gives me a check in the name of the agency, along with an order to transfer the car to me. Then the car will be assigned directly to me, although the check was not issued in my name.
May Allaah Reward you.

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His Slave and Messenger.

We think that this transaction is not permissible. It is not a valid form of Muraabahah in the Sharee‘ah sense of the word. The permissible form is that the bank completely buys the car, with or without a choice, owns it, even for a short period of time so that if the car is damaged during that period the bank will guarantee it, and then sells it to you. It does not matter then that the car is not officially registered in the name of the bank, as it can be registered in your name directly. If the transaction is otherwise violated, then it will be based on Riba. This will not be affected by whether the bank wrote the check in the name of the agency, because merely issuing a check in the agency’s name does not indicate that the bank has purchased the car from it.

Allaah Knows best.