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* Murabaha – The Islamic credit union/bank purchases goods in its own name and sells them to a businessperson at an agreed-upon mark-up. Because they actually take title and re-sell, the credit union/bank are performing a legitimate service and earning a legitimate profit. * Mudaraba – The Islamic credit union/bank lends money to a client for a productive enterprise – in industry, in commerce, etc. – in return for a specified share of the profits of the enterprise every year for a specified number of years. The share of profits constitutes repayment of the loan principal and a profit for the bank to pass on to depositors in the form of dividends. If the enterprise fails, the loss is shared by the borrower, the lender, and its depositors. * Muqarada – The Islamic credit union/bank issues “Islamic bonds” to finance a specific project. Investors who buy the bonds share in the profits of the project, but are not guaranteed a high profit or may even incur a loss. * Musharaka – The Islamic credit union/bank enters into an equity capital partnership with a client and may even participate in the management of the enterprise. The credit union/bank and the client share profit or losses in proportion to their equity investment. * Ijara-Ijara Wa Iktina – The Islamic credit union/bank leases or makes an installment loan to a client for car or some other item, that the client is obligated to use productively and in keeping with Islamic law. * Salam – Similar to a futures contract, a purchaser pays in advance for a specified quantity and quality of a commodity for later delivery, such as pre-purchase of an agricultural crop still in the fields. * Muzara’a – A sharecropping deal where the landowner shares in the tenant farmer’s harvest at the end of the growing season. Source: Sound Vision Foundation

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