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Financing Construction Under Murabaha
A client approaches a bank with a request to finance the construction of a building over land owned by the client. The bank gets a specified percentage of mark-up as profit. Is such a transaction permissible under Murabaha contract?
Murabaha is a contract of sale in which the owner of an asset sells the asset to the buyer at a known mark-up. The transaction described does not fall under the category of Murabaha since there is no asset to sell. However, such a transaction may be financed under an Istisna mode of financing.

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