How Murabaha Documentary Credits Work

You request us to purchase goods using a Documentary Credit to be further sold to you at an agreed profit. You provide the bank with the specifications of what you require to be imported and also the name of the supplier.

Sight DC: SABB will pay the negotiating bank on receipt of documents and either sell the goods to you for immediate payment (no financing required by you) or on deferred payment terms (if you avail of our Murabaha Import Finance Facility).

Usance DC: SABB will sell the goods to you on deferred payment terms for an agreed period beyond the import bill’s due date (if you avail of our Murabaha Import Finance Facility).  If you did not request for financing then on the due date, SABB will pay the negotiating bank and receive payment from you immediately or you may opt for our Tawarruq Import Finance Facility and pay us on a later agreed date.

Documentation: Prior to establishing the DC, the following documents should be in place duly signed by your authorized signatories:

• Murabaha DC Agreement
• Murabaha DC Request (Irrevocable Documentary Credit Application – Murabaha)

Thereafter, for every shipment under the DC a Murabaha Sale Contract and repayment schedule would be signed.