Islamic finance terms (murabaha, sukuk and Arboon) explained.

Murabaha is a Shariah-compliant sale where the seller expressly mentions the cost he has incurred on the commodities to be sold and sells it to another person by adding some profit or mark-up which is known to the buyer. For example, instead of a bank lending money to a customer who wants to buy a commodity, the bank buys the commodity and sells it to the customer for a declared marked-up sum. That way the bank makes money on the transaction without it being through interest.

Sukuk means a financial certificate in Arabic. A sukuk is a security based on the securitisation of performing assets that resembles a bond, complying with Islamic law prohibiting the charging or paying of interest.

Sukuk al salam is a form of sukuk based on a salam contract for the delivery of fungible assets.

Arboon is a Shariah form of sale contract in which seller and buyer effect a contract in which a portion of the price is paid in earnest money. The buyer then has the right to complete the sale within a specified period of time or to cancel the contract and forfeit the down payment.

Source: Shariah Capital.