Another error is for the client to buy the commodity first and then arrange for the bank to buy it from him and resell it back to him. This creates a pre-arranged buy-back rather than an independent commodity transaction.
The structure is rejected because the bank is not genuinely entering the market as an independent buyer before selling onward.
Opening interactive controls...
Islamic Banking: Operational Mistakes and the Way Forward
Another error is for the client to buy the commodity first and then arrange for the bank to buy it from him and resell it back to him. This creates a pre-arranged buy-back rather than an independent commodity transaction.
The structure is rejected because the bank is not genuinely entering the market as an independent buyer before selling onward.