Their Islamic identity to organise their collective life in accordance

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Anyhow, the Islamic financial institutions are under an obligation to make sure that murabahah is a real and genuine transaction of actual sale and is not being misused to camouflage an interest-based loan.

3. 
   In some cases, sale of commodity to the client is effected before the commodity is acquired from the supplier. This mistake is invariably committed in transactions where all the documents of murabahah are signed at one time without taking into account various stages of the murabahah. Some institutions have only one murabahah agreement which is signed at the time of disbursement of money, or in some cases, at the time of approving the facility. This is totally against the basic principles of murabahah. It has already been explained in this article that the murabahah arrangement practiced by the banks is a package of different contracts which come into play one after another at their respective stages. These stages have been fully highlighted earlier while discussing the concept of murabahah financing. Without observing this basic feature of murabahah financing, the whole transaction
   

turns into an interest-bearing loan. Merely changing the nomenclature does not make it lawful in the eyes of Shari‘ah.
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The representatives of the Shari‘ah Boards of the Islamic banks, when they check the transactions of the bank with regard to their compliance with Shari‘ah, must make sure that all these stages have been really observed, and every transaction is effected at its due time.

4. 
   International commodity transactions are often resorted to for liquidity management. Some Islamic banks feel that these transactions, being asset-based, can easily be entered into on murabahah basis, and they enter the field ignoring the fact that the commodity operations as in vogue in the international markets, do not conform to the principles of Shari‘ah. In many cases, they are fictitious transactions where no delivery takes place. The parties end
   

up paying differences. In some cases, there are real commodities but they are subjected to forward sales or short sales which are not allowed in Shari‘ah. Even if the transactions are restricted to spot sales, they should be formulated on the basis of Islamic principles of murabahah by fulfilling all the necessary conditions already mentioned in this book.

5.