Why Murabahah receivables are not freely tradable, why discounted debt sale is problematic, and when a mixed fund can trade Read the bilingual lesson for Murabahah Funds, Sale of Debt (بيع الدين) and Mixed Funds and test your understanding with a focused quiz.
Lesson
1. What Does a Murabahah Fund Own After the Sale?
In a Murabahah fund, the fund purchases commodities and then sells them to clients on deferred payment at cost plus an agreed profit.
Once the commodity is sold to the client, the fund no longer owns that commodity. What remains in the fund is mainly cash and the deferred amount receivable from clients.
2. Why Murabahah-Fund Units Are Not Freely Tradable
If the portfolio mainly represents cash and receivable debts, its units also represent cash and debt rather than tangible assets.
Therefore, these units cannot be freely bought and sold in a secondary market at changing prices. The source presents a Murabahah fund as a closed-end structure whose units are not negotiable like asset-backed fund units.
3. What Is Sale of Debt (بيع الدين)?
Sale of debt (بيع الدين) means selling a monetary receivable to another party. A common example is selling a bill or debt claim before maturity at a discount.
Once a commodity has already been sold and only money remains payable, the seller no longer owns the commodity. What he owns is a monetary claim.
4. Why Discounted Debt Sale Creates a Riba Problem
A monetary debt is effectively money owed. If a debt of 100 is sold for 90 in the same currency, the transaction becomes an exchange of unequal amounts of money.
The traditional jurists and overwhelming majority of contemporary scholars described therefore do not allow sale of monetary debt at a discount.
5. What About the Shafi‘i Reference Sometimes Cited?
Some scholars have cited a Shafi‘i allowance for sale of debt. The clarification given is that the permission referred to is at par value, not at a discount.
Therefore, using that view to justify ordinary discounted debt trading would go beyond the position described.
6. Why the Original Commodity Does Not Rescue the Debt
One argument says that if the debt arose from selling a commodity, the receivable still represents that commodity. The response is that once the sale occurred, ownership of the commodity passed to the buyer.
The seller now owns only the money receivable. Therefore, trading that receivable is debt trading, not commodity trading.
7. What Is a Mixed Islamic Fund?
A Mixed Islamic Fund combines different types of investments, such as equities, leased assets and commodities. Because its portfolio contains different asset classes, tradability depends on the overall composition.
The question is whether the fund is predominantly represented by tangible/non-debt assets or by liquidity and receivables.
8. The 51% Tangible-Asset Rule Presented
The source states that if tangible assets are more than 51% and liquidity plus debts remain below 50%, fund units may be negotiable.
If liquidity and debts exceed 50%, the majority contemporary view described does not allow secondary-market trading of the units, so the fund should be closed-end.
9. One Principle Connects All Three Topics
Murabahah funds, sale of debt and mixed funds may look like separate topics, but one principle connects them: what does the certificate actually represent?
If it represents real tradable assets, market trading may be possible. If it represents mainly money and receivables, money/debt rules become dominant. This is the same ownership-versus-receivable distinction seen repeatedly throughout Islamic finance.