Case Study 1: The Commodity Murabahah Gone Wrong
Global Islamic Bank (GIB) offers commodity Murabahah personal finance: (1) Client applies via mobile app for $100,000; (2) System purchases 50 tons of nickel on LME through Broker Alpha; (3) System sells nickel to client at cost + 8% = $108,000 payable in 48 months; (4) Client authorizes GIB to "handle logistics"; (5) GIB sells to Broker Beta for $100,000 spot; (6) $100,000 deposited to client; (7) Broker Alpha and Beta are subsidiaries of the same trading house; (8) Nickel certificates reference commingled warehouse lots; (9) Shari'ah board approved 4 years ago — central bank now requires proof of "genuine commodity ownership transfer."
| Topic | Finding | Compliant? |
|---|---|---|
| Murabahah | Bank purchases commodity — genuine ownership transfer needed | ✅ If genuine |
| Murabahah | "Handle logistics" authorization = delegation to sell | ❌ Disguised agency |
| Tawarruq | Commingled warehouse lots — commodity NOT distinct | ❌ |
| Tawarruq | Broker Alpha and Beta share same parent — circular | ❌ |
| Tawarruq | Single application links credit purchase and on-sale | ❌ |
| Tawarruq | "Logistics" authorization = delegation to institution | ❌ |
| Tawarruq | Client plays no active role in on-sale | ❌ |
| Fatwa Ethics | 4-year-old approval + new regulatory requirements = fresh fatwa needed | ❌ |
Case Study 2: Salam vs. Istisna'a — Choosing the Right Structure
Request A: A wheat farmer needs $200,000 to fund planting; expects 500 tons of Grade A wheat in 6 months. → Salam: wheat is fungible; farmer needs full capital upfront; strict specifications (protein ≥12%, moisture ≤14%); delivery in 6 months; NOT from a specific farm.
Request B: A tech company needs $500,000 to build a custom data center; 12-month project. → Istisna'a: custom-built item; flexible payment (20% upfront, progress payments); detailed technical specifications; manufacturer cannot exclude defect liability; bank may enter Parallel Istisna'a.
If the wheat farmer delivers only 400 tons: The buyer may: (a) accept 400 tons and recover proportional capital for undelivered 100 tons, (b) wait for remaining 100 tons, or (c) cancel and recover all capital. The buyer CANNOT claim compensation for opportunity loss.