Islamic Banking Product Murabaha PDF

ISLAMIC BANKING PRODUCT
MURABAHA
User Guide
Islamic Banking User Guide
Murabaha
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TEMENOS Confidential Page 2 of 51 November 2007

Murabaha
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Item Detail
PRODUCT NAME MURABAHA
DOCUMENT TYPE User Guide
CONTACT BACK TO gpack@temenos.com
SPECIAL COMMENTS (1) If Field Information is Crossed Out, it

implies that the field is Not used under
the current version of the Development.
( Document Specific )
SPECIAL COMMENTS (2)
(Development / Support) Specific

SPECIAL COMMENTS (3)
(Client Specific)

Murabaha
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Serial No Last Doc Version Author Comments

Updated
1.0 10.06.2006 Version 1 Liril Thomas New
1.1 11.11.2007 Version 2 Jude Roy Browser Release
Jaideep
Table of Contents
ISLAMIC BANKING PRODUCT ....................................................................................................... 1
User Guide........................................................................................................................................ 1
Overview of this guide ...................................................................................................................... 6
Assumptions.................................................................................................................................. 6
Document Support ........................................................................................................................ 6
Scope of this guide ....................................................................................................................... 6

Murabaha
Introduction ....................................................................................................................................... 7
Document Purpose ....................................................................................................................... 7
TEMENOS T24 TM Modules Supported ........................................................................................ 7
Abbreviations used in this Guide .................................................................................................. 8
Murabaha Work Flow ....................................................................................................................... 8
WHATIF ANALYSIS ...................................................................................................................... 9
Process Flow .................................................................................................................................. 12
MURABAHA PROCESSING....................................................................................................... 12
Asset Request ................................................................................................................................ 13
Asset Purchase............................................................................................................................... 16
Murabaha Purchase (Pre-Approval) ........................................................................................... 16
Murabaha Purchase .................................................................................................................... 18
Murabaha Down Payment .......................................................................................................... 21
Miscellaneous Charges:.............................................................................................................. 22
Payment to Vendor/Supplier ....................................................................................................... 22
Reverse Asset Purchase ............................................................................................................ 23
SALE MURABAHA ......................................................................................................................... 24
Sale Murabaha to Client ............................................................................................................. 25
Reduce/Increase maturity dates ................................................................................................. 26
Postponement Murabaha Contract ............................................................................................. 29
Murabaha Early Maturity ............................................................................................................. 30
RE-Possess Operations ................................................................................................................. 31
Bank settle PD Payments ........................................................................................................... 31
Re-POSSESS Murabaha Contract ............................................................................................. 32
Resale Murabaha Asset.............................................................................................................. 33
Re-Purchase Murabaha Asset .................................................................................................... 34
Past Due Operations ...................................................................................................................... 35
Customer's PD repayments ........................................................................................................ 35
Charity Operations .......................................................................................................................... 36
Payment of Overdue charity Amount .......................................................................................... 36
LC Murabaha .................................................................................................................................. 37
Basic ISB Set Up Tables............................................................................................................. 39
ISB Products ............................................................................................................................... 39
ISB Product Parameter ............................................................................................................... 40
ISB Cost Types ........................................................................................................................... 46
ISB Commodities ........................................................................................................................ 47
MURABAHA Accounting Entries .................................................................................................... 48

Murabaha
Overview of this guide
The purpose of this guide is to help the user to understand the various templates and the fields in
the templates and the crucial setup of any PARAMETER Files in the MURABAHA product.
Assumptions
It is assumed that the reader of this guide has knowledge of the following.
Fair knowledge in TEMENOS T24 TM

Basic knowledge in LD.LOANS.AND.DEPOSITS module
If any of the above assumptions are not met, then get back to the Project Manager Onsite for
HELP.
Document Support
Any queries in any part of this document can be addressed to gpack@temenos.com. Refer to the
Contact Back To address in the Document Detail pane on Page 3 of this Guide for support.
Scope of this guide

User Reference information of this particular development is the only scope of this guide.
Installation, Customization Procedures, Release Information, Guidelines for testing,

Operation and Migration procedures are NOT under the scope of this Document

Murabaha
Introduction
The Murabaha contract revolves around the purchase of an asset by the Bank and the onward
sale of the same by the Bank to a customer. The purchase may involve commodities, real estate,
vehicle etc
The bank makes a profit on the transaction, which is the difference between the price, which it
pays to the supplier of the goods, and the price at which it sells the commodity to the customer.
This mark-up will be agreed between the Bank and the customer in advance. The financed
amount and profit are due and payable on terms agreed between the two parties.
Document Purpose
This document provides information to the user to understand the different parameter files and
their setup. This document provides detailed information about every Field of all the Files used in
the MURABAHA Islamic Product
TEMENOS T24 TM Modules Supported
The following Files in the Following Modules are Supported and Used by this Murabaha
Islamic Product.
LD.LOANS.AND.DEPOSITS
FUNDS.TRANSFER
PD.PAYMENT.DUE
LIMIT
LMM.CHARGE.CONDITIONS
FT.TXN.TYPE.CONDITION
PD.PARAMETER

Murabaha
Abbreviations used in this Guide
S Single Value Field

M Multi Value Field
AMS Associated Multi Value Starts Here
AM Member of Associated Multi Value
AMC Associated Multi Value Closes Here
Murabaha Work Flow
1. Corporate / Retail customers will apply to bank for purchase of asset or service for their
business or personal needs. The customer will sign a Murabaha request form and also
furnish the specification of required Assets (Car/Property/Goods/Equipment) along with
the supplier details, and quotation.
2. Bank will approve the customer's request and give an acceptance to initiate the
transactions to customer.
3. Customer will sign the PTPS promise for purchase and sale. At this stage, bank may take
a certain amount as Aarbun (Down payment).
4. Bank will purchase the asset from market. All necessary external costs incurred by the
bank to bring the asset to its intended use will be added to the total cost of the asset or
can be waived by the bank
5. Once the asset as per agreed specifications is in possession of bank, the customer will
sign the Murabaha agreement with the bank at an agreed fixed price (including profit
amount. At this stage, Aarbun amount (if taken earlier) will be adjusted in the sale price.)
6. The repayment of the Murabaha Amount will be fixed for the asset and profit by a defined
frequency and calculated automatically by system.
7. System will cover all basic features for finance processing like Re-schedule / Early
maturity / Partial repayment / Reversing Murabaha / Postponement/ And Liability
Transfer
8. System will capture required information for Guarantor and will generate a Guarantor
enquiry / Report

Murabaha
WHATIF ANALYSIS
This function will be used by the Murabaha Dealer to try different scenarios for instalments and
profit rate calculations. Once the user gets the final results, they can print the final estimate and
get it signed from the customer before proceeding to the murabaha sale contract (Finance
contract).
User has to input the Total Cost of the Asset, Down payment if any, Frequency of the contract,
Number of months, Flat rate or Murabaha profit Amount or Murabaha Reduced Rate.
As soon the user enters the down payment, the same amount will get debited from the Total
Purchase Cost Amount and the field will show the reduced amount.
WHAT-IF Analysis Results

o No of Instalments
o Total Murabaha profit Amount
o Instalment Amount

Murabaha
Mur Repay Frequency: The frequency of the schedules. It can be in terms of number of days or
months.
Murabaha Amount: (Purchase amount + Mur Profit Amount)
No of Instalments: Number of instalments in the particular Murabaha contract

Murabaha
Following WHAT IF option, will allow the user to input the Installment amount payable on every
instalment and will calculate the maximum finance amount that can be provided.

Murabaha
Process Flow
MURABAHA PROCESSING
The following screenshot shows the menu for all processes concerning a Murabaha contract:

Murabaha
Asset Request
The first stage in Murabaha Processing is to define an asset and the supplier from whom the bank
is buying it. Use the Asset Request from the menu. On clicking the "New Deal" Icon, an automatic
ID is generated for the contract (hereafter called the IAR contract). The ID has the format IAR-
Julian Date - Unique serial number.
The options available in "Asset Request" are:
Vehicle
Real Estate
Equipment
Movable Equipment
Miscellaneous Asset

Murabaha
Applied Customer ID: The party to whom the goods are going to be leased under the
Murabaha contract. Enter the customer id in this field
Supplier ID: The party from whom the goods are being purchased. Should be a valid entry in
the CUSTOMER file
Supplier Name: The name of the Supplier. We have the option to input either supplier id or
supplier name
Supplier's Acc: The account of the purchase counter party with the bank. If no account
exists, an internal account can be input.
Purchase Price: The price per unit of the goods being purchased
Total Goods Cost: The product of the PURCHASE.PRICE multiplied by the
PURCHASE.QTY
Currency: The currency in which the contract is undertaken. This will have to be the same as
the currency to be used for purchase. This is a no input field
Note: A single customer can have more than one asset defined in
ISB.ASSET.REGISTER table
Each Option available under the Asset request, like Vehicle, Real Estate etc, will contain
asset details field relevant to its type. Following screen will show the Asset details screen
available under Vehicle Asset type.

Murabaha

Murabaha
Asset Purchase
The second stage in Murabaha Processing is the Asset Purchase. Choose the option Asset
Purchase from the menu. The actions carried out in Asset Purchase are:
Murabaha Purchase (Pre-Approval)

Murabaha Purchase (Received Goods)
Murabaha Down Payment
Miscellaneous Charges
Payment to Vendor/Supplier
Reverse Asset Purchase
Murabaha Purchase (Pre-Approval)

The first stage is to approve the purchase of the asset. To do the pre-approval, click on the
'Murabaha Purchase (Pre-Approval)' item on the menu. On clicking the "New Deal" icon, an
automatic ID is generated for the contract (hereafter called the IS contract).
The ID has the format IS- Julian Date - Unique serial number.

Murabaha
The first tab in this screen "Murabaha Request" has the following fields:
PRODUCT.CODE: The product that is being purchased for this particular Murabaha contract.
This is a no-input field, which will be defaulted by the system and has to be a valid record in the
IS.H.PRODUCTS file. Value in the PRODUCT.CODE field will determine which parameter record
the system has to access for further processing.
Customer Sale Cparty: The party to whom the goods are going to be leased under the
Murabaha contract. Enter the customer id in this field
Multiple Asset/Supplier: This field defines whether there are multiple assets/suppliers
Asset ID: A Valid record in ISB.ASSET.REGISTER application. Choose the appropriate asset id
from the drop-down menu
Currency: The currency in which the contract is undertaken. This will have to be the same as the
currency to be used for purchase of the goods at a later stage. Should be a valid record in the
CURRENCY file.
Purchase Price: This is a mandatory field, which contains the total Cost of the Asset. Enter the
purchase amount in this field.

Murabaha
Find below the screenshot of the 'IS.H.CONTRACTS' after authorisation.

When the MULTI.SUPPLIER field is set to YES, it is possible to attach more than one asset under
a single purchase contract.
Murabaha Purchase
After the Pre-Approval of the contract, the bank will purchase the required goods from the market.
The 'Murabaha Purchase' option has to be chosen from the menu. The same contract ID that
was used when doing the Pre-Approval will have to be input in the ID line.
The 'Purchase Details tab will default information that has been captured at the time of doing the
Pre-Approval. The last field AVAILABLE.QTY shows the number of units of the commodity
purchased that are still available with the bank.
Choose the option Murabaha purchase under Asset Purchase

Murabaha

Murabaha
The actual information regarding purchase is captured under the tab 'Purchase Details',
containing the following fields:
COST.TYPE: This is a valid record in IS.H.COST.TYPES. It should have been defined earlier by
using the 'ISB Cost Types' option under 'Basic ISB Set up Tables' in the Menu
Cost Amt: The amount of the cost incurred for the cost type mentioned in the previous field.
Cost Date: The date on which the costs were incurred
Cost. Cparty.Acc: The account of the counter party to whom the costs are being paid. If such
account does not exist, an internal account can be input here.
Add.To.Total: The allowed inputs for this field are YES or NO. If YES is chosen, then the cost in
COST.AMT is added to the basic cost of the goods, as it appears in the TOTAL.GOODS.COST.
If the input in this field is NO, then the amount in COST.AMT is not added to the basic cost of the
goods.
Net Cost: This field shows the net amount (Total.Goods.Cost + Cost.Amt depends on the
ADD.TO.TOTAL field)

Murabaha
Murabaha Down Payment

If the customer is making a down payment, the user can choose Murabaha Down payment from
Asset Purchase option. Note that any down payment in Murabaha should be done before
entering into the actual Murabaha contract with the customer (Sale Murabaha to Client option
from the menu). This will generate a FT ID for the contract.
Enter the Customer number in Customer ID field and in IS Contract Id field, the relevant IS
contract will have to be input. The user has to enter the amount in the Down Payment Amt field

Murabaha
Miscellaneous Charges:
Additional charges which will not be linked to the Purchase / finance contract can be captured
using this option.
These charges can be captured during any stage.
User will input the Customer ID, Purchase reference under the customer name, and the charge
details to be captured.
Payment to Vendor/Supplier
During the Murabaha contract process, the bank can start the payment process to the
Vendor/Supplier. Choose the option Payment to Vendor/Supplier under Asset Purchase. The
user has to enter customer number in the Customer ID field as shown below. This will
automatically generate a FT ID for the contract.
In the field Purchase Contract Id, the relevant IS contract will have to be input and choose the
relevant asset id from the drop down menu. The amount will get automatically displayed in the
Credit Amount field. Banks can even do the partial payment by entering the amount in this field.

Murabaha
Reverse Asset Purchase

After the conclusion of purchase transaction, if the customer backs out from his promise to
purchase the asset from bank, the purchase transaction will be cancelled by using the 'Reverse
Asset Purchase'
Upon authorisation of such Reversal, contra entries will be generated for the entries generated at
the time of authorisation of input of the corresponding purchase transaction.

Murabaha
SALE MURABAHA
The actions carried out in Sale Murabaha are:
Sale Murabaha to Client

Reduce/Increase Maturity Dates
Partial Murabaha Payment
Postponement Murabaha Contract
Murabaha Early Maturity
Murabaha Amendment of Accounts

Murabaha
Sale Murabaha to Client
This option is used to capture the actual Murabaha Contract. The screen shot is given below:
The user has to enter the Customer number in the Customer ID field and choose the relevant IS
contract id from the drop down menu. User can enter the same frequency, No of months and
Profit Amount that were captured from the What if Analysis Screen. This will automatically
generate a LD ID for the Murabaha contract as shown below:

Murabaha
Customer ID: Murabaha Counter party. Mandatory field. Enter the customer id in this field
Pur Contract Id: The id of the pre-approved contract. Choose the corresponding contract id from
the drop down menu.
Mur Repay Frequency: The frequency of the schedules. It can be in terms of number of days or
months.
No of Instalments: Number of instalments in the particular Murabaha contract
Reduce/Increase maturity dates
The user may wish to extend or reduce the maturity of the contract, in which case, the Final Pay
Date field has to be input with the new maturity date. On committing the contract, he/she would be
required to define schedules again in the new screen
The Instalment Amount field will show the new calculated instalment Amount based on the new
Final Pay Date.

Murabaha

Murabaha
Partial Murabaha Payment

At any time during the tenure of the contract, the customer is allowed to pay the instalment
amount in advance, by choosing 'Partial Murabaha Payment' option from the Menu. User has to
enter the no of instalments that the customer is going to pay in advance in No of Inst to Pay
field as shown below.

Murabaha
Postponement Murabaha Contract

During the Murabaha Contract, User can postpone the instalment to pay, by choosing
'Postponement Murabaha Contract' option from the Menu. User has to enter the no of
instalments that the customer is going to postpone in No of Instalments field as shown below.
The Final Pay date will get updated with the new pay date based on the number of months that
the customer is extending.

Murabaha
Murabaha Early Maturity

The customer will use this action in case of early settlement of a Murabaha contract.
During the pre closure of the contract, a specified percentage of the profit amount will be given
to the customer as bonus. The percentage is defined in EARLY.RATE field in IS.H.PARAMETER
table. The bonus amount is reflected in Bonus Amount field.
The closure can be done only with effect the bank date. On retrieving the desired contract, the
date in FINAL.PAY.DATE will automatically be set to current date. On committing the contract,
any pre-defined schedules that may exist will be removed by the system.

Murabaha
RE-Possess Operations
The actions carried out in Repossess of Murabaha Contract are:
Bank Settle PD Payments

Re-POSSESS Murabaha Contract
Resale Murabaha Asset
Re-Purchase Murabaha Asset
Bank settle PD Payments

If the customer is defaulted for some months, the bank will take the decision of repossessing the
asset by settling the PD amounts. Choose the option Bank Settle PD payments under RE-
Possess OPS. To choose the appropriate record, prefix the LD contract with 'PD' and commit
the record.

Murabaha
Re-POSSESS Murabaha Contract

In case of non-recovery of murabaha instalments from murabaha customer, a Murabaha contract
will be suspended after the number of days set-up on SUSP.OD.DAYS field on murabaha
contract. After suspension of murabaha contract, bank will have to resort to repossession of the
asset from murabaha customer. At the time of repossession, based on the difference between
book value of the asset and the market value of the asset the bank may make a profit or a loss.
User should input the market value of the asset at the time of repossession in MARKET.VALUE
field.
Note: After the Re-possession of the asset the bank can make a decision to either sell the asset
in the market or can enter into a new murabaha contract. Choose the option Resale Murabaha
Asset or Re-purchase Murabaha asset under RE-Possess OPS.

Murabaha
Resale Murabaha Asset

This action will be used in cases where murabaha contract asset has been repossessed by the
bank due to non-recovery of rental instalments from the original murabaha customer. Should input
the resale counter party & counter party account in Resale Cparty & Resale Cparty Acc fields
respectively under the Resale Details tab. Also input the Date in the Resale Date field.

Murabaha
Re-Purchase Murabaha Asset
The bank to enter into a new murabaha contract by the pre-approval of the Purchase contract id
will use this action. An automatic ID is generated for the contract (hereafter called the IS contract).
The ID has the format IS- Julian Date - Unique serial number.
Choose the option Re-Purchase Murabaha Asset under RE-Possess OPS.
Re-Possessed Purchase ID: Enter the IS contract id used in the Murabaha contract.
Customer Sale Cparty: Enter the new murabaha customer id. This is a mandatory field
Asset ID: Choose the appropriate asset id from the drop-down menu

Murabaha
Past Due Operations

Customer's PD repayments
During the murabaha Contract, the customer can settle the PD amounts if any. Choose the option
Customers PD repayments under Past Due OPS. To choose the appropriate record, prefix
the LD contract with 'PD'
The field VALUE.DATE is used to input the date on which the repayment is being made and the
amount to be repaid can be input in the REPAYMENT.AMOUNT field. The ACCOUNT.TO.DEBIT
field should contain the customer's account.

Murabaha
Charity Operations
Payment of Overdue charity Amount
The calculations of penalty charges for the over dues will happen only after the PEN.GRACE in
the Murabaha contract have been crossed. To see the amount of penalty charges outstanding or
to make repayment of the same, choose 'Payment of Overdue Charity Amount' on the Menu. If
the entire penalty is to be waived, an amount of 0.00 can be input in the
PENALTY.CHARGE.PAID field and the whole penalty amount can be input in
PENALTY.CHARGE.WAIVED. The user can even repay a part of the penalty amount and the rest
can be waived. To choose the appropriate record, prefix the LD contract with 'PD'
The 'Charge Default Details' tab shows the date-wise penalty amounts that have fallen due.
The 'Repayment Details' tab shows the amounts that have been paid online

Murabaha
LC Murabaha
LC Murabaha is different from Regular Murabaha processing in that, the asset is a Trade finance
contract.
The customer requests the Bank to provide LC facility to purchase or import goods indicating that
he is willing to purchase the goods from the Bank on their arrival.
Bank will open the LC for the customer goods and payment will be made by the Bank to the
negotiating Bank.
To understand the functionalities of LC / Drawings, kindly refer to the Core T24 User guides.
Following screen is used to capture the LC.

Murabaha
On arrival of the goods, the Bank will make the drawings on the LC. Supplier payment will happen
at this stage.
Up on arrival of the Goods (After making the drawings contract on that LC) the bank will enter in to
a Murabaha contract with the customer at a pre-agreed price that is comprised of the cost plus a
profit margin (Mark-Up). System allows the Drawings Contract to be linked to the Retail Murabaha
Finance.

Murabaha
Basic ISB Set Up Tables

The tables mentioned below are one time set-up that is used in Murabaha implementation.
Choose the option 'Basic ISB Set Up Tables' from the menu 1 to view these tables.
ISB Products
IS.H.PRODUCTS
File Type: H
About This File
Each Islamic Product should have a valid id in this table. Record id '1' is used to define
Murabaha product.
IS.H.PRODUCTS - Field Description and Population Rules
No Field Name Length M/S Description

2.1.0 PRODUCT.CODE 5 S The id of the file. The product id for the
particular Islamic product
2.1.1 GB DESCRIPTION 35 AMS Description of the product
2.1.2 SHORT.DESC 35 AMC Short description of the product
2.1.3 PROFIT.BASIS 3 S Valid id in INTEREST.BASIS table
2.1.4 TWQ.FLAG 1 S Contain the value YES or NO
2.1.5 CDT.FLAG 1 S Contains the value YES or NO
2.1.6 FWL.FLAG 1 S Contains the value YES or NO
2.1.7 PRODUCT.TYPE 3 S Valid record in
IS.H.PRODUCTS.TYPES table
2.1.8 CORP.FLAG 3 S To Define whether this is a corporate
product. Used for Limit purposes.
2.1.9 VENDOR.PAY 8 S If set to EXTERNAL, supplier account
will be defaulted to internal supplier
account.
If set to INTERNAL, supplier account
will be inputted manually or defaulted
based on the Supplier ID.
2.1.10 LOCAL.REF 35 M Local Ref field
Figure 1 - IS.H.PRODUCTS

Murabaha
ISB Product Parameter
IS.H.PARAMETER
File Type: H
About This File
This is a system parameter file, governs the processing and accounting of Murabaha. The ID of
this file has to be defined first in IS.H.PRODUCTS file. Record is '1' is used to define the
Murabaha product in this table
IS.H.PARAMETER - Field Description and Population Rules

2.3.0 @ID 5 S The product id created for murabaha in
IS.H.PRODUCTS table
2.3.1 PUR.CATEG 5 S This is an internal account category.
When the bank purchases an asset for
the purpose of leasing it out in financial
Murabaha, a sundry debtors account
opened under this category, in the
currency of purchase, is debited.
2.3.2 SEC.DEP.CATEG 54 S Customer account category. The
Hamish Jiddiyya, which is received from
the customer, is debited to the
murabaha client's account under this
category. This account is opened
automatically by the system when a
Hamish Jiddiyya is taken.
2.3.3 RESALE.PL.CATEG 54 S If after the purchase of commodity for
the purpose of leasing, the Murabaha
customer backs out of his promise to
lease the same, the bank may have to
do an outright resale of the commodity
in open market. If the bank makes a
profit on account of selling the goods in
the open market, such profit is credited
to this P/L category
2.3.4 LOSS.REC.CATEG 4 M When the bank makes a loss on
account of selling the goods in the open
market, such loss is debited to the
internal account in this category. The
bank may thereafter try to recover the
loss from the original customer of the
Murabaha, or write it off to Profit and
Loss Account.

Murabaha
2.3.5 POST.RESTR.CODE 35 M For customer accounts that are opened

by the system under the categories
mentioned in SEC.DEP.CATEG,
PROFIT.RECD.ADV and SUSP.CATEG
fields, there should be no manual
interference from users at a later stage,
as these accounts have been opened
for specific purposes. Input in the
POST.RESTR.CODE here will be
defaulted by the system into the
POSTING.RESTRICT field of the
account record, which it opens
automatically. If any manual changes
are done in this account and the record
is committed, the system will raise an
override. The value that is input in the
POST.RESTR.CODE field should be a
valid record ID in the
POSTING.RESTRICT file
2.3.6 TRANSIT.CATEG 3 S Not used

2.3.7 CHARITY.CATEG 16 S The internal account category to which
penalty charges received from
defaulting customers is credited. These
funds are meant to be used for
charitable purposes.
2.3.8 RESERVED.11 35 S No input
2.3.9 PUR.TXN.TYPE 4 S Contains the ID to a record in the
FT.TXN.TYPE.CONDITION file, which
in turn contains the transaction codes
that are to be used by the system when
purchase of goods is done.
2.3.10 SEC.DEP.TXN.TYPE 4 S Contains the ID to a record in the
Hamish Jiddiyya is taken from the
customer.
2.3.11 SALE.MAIN.TXN.TYPE 4 S Contains the ID to a record in the

that are to be used by the system for the
sale proceeds when a market resale is
done.
2.3.12 SALE.SDA.TXN.TYPE 4 S Contains the ID to a record in the
a loss is incurred on a market resale
and the available Hamish Jiddiyya

Murabaha
amount is used to offset such loss.

2.3.13 SALE.PRF.TXN.TYPE 4 S Contains the ID to a record in the
a profit is made on a market resale and
such profit is credited to the appropriate
P/L category.
2.3.14 SALE.LRL.TXN.TYPE 4 S Contains the ID to a record in the
and such loss or a portion thereof is to
be recovered from the original
Murabaha customer.
2.3.15 SALE.LRD.TXN.TYPE 4 S Contains the ID to a record in the
and such loss or a portion thereof has
been recovered from the original
Financial Murabaha customer
2.3.16 COST.TXN.TYPE 4 S Contains the ID to a record in the
additional costs are incurred along with
the purchase.
2.3.17 SALE.CPTY.TXN.TYPE 4 S Not used

2.3.18 PENALTY.TXN.TYPE 4 S Contains the ID to a record in the
penalty charges are collected from the
Financial murabaha customer on default
in payment.
2.3.19 PROFIT.CENTRE.DEPT 4 S The Profit Centre under which deals are
booked. This should be a valid entry in
the DEPT.ACCT.OFFICER file.
2.3.20 PROFIT.RECD.ADV 5 S The profit that is built into a Murabaha
contract will be credited to a customer
account under the category given in this
field. This account is opened by the
system.
2.3.21 ACCR.DR.CODE 3 S The transaction code that is used when
daily amortisation of profit is done by
debit to the Profit Recd Adv customer

Murabaha
account. Should be a valid entry in the

TRANSACTION file
2.3.22 ACCR.CR.CODE 3 S Accrual Credit Txn Code
2.3.23 SUSP.CATEG 5 S When the Murabaha customer defaults
in making repayments and the profit
amortisation is to be suspended, the
suspended profit is credited to a
customer account under this category,
instead of to the Profit and Loss
category. This account is opened by the
system.
2.3.24 SUSP.DR.CODE 3 S When profit amortisation is to be
suspended, the transaction code in this
field will be used for the debit to Profit
Recd Adv account. Should be a valid
entry in the TRANSACTION file.
2.3.25 SUSP.CR.CODE 3 S When profit amortisation is to be
suspended, the transaction code in this
field will be used for credit to the to
SUSP.CATEG account. Should be a
valid entry in the TRANSACTION file.
2.3.26 SUSP.OD.DAYS 3 S The number of days after a payment
becomes overdue (and is still overdue)
that the amortisation of profit received in
advance is suspended. If the number of
days is not mentioned at the contract
level or the customer level, the number
of days specified in this field will be
defaulted to the Murabaha contract
2.3.27 PEN.DR.CODE 3 The transaction code that is used when
the customer's account is debited for the
penalty charge. Should be a valid entry
in the TRANSACTION file.
2.3.28 PEN.CR.CODE 3 S The transaction code that is used when

the charity account mentioned in
CHARITY.CATEG is credited with the
penalty charge recovered from the
defaulting customer.
2.3.29 PEN.FEE 19 S The penalty charge (flat amount) that is

to be levied if the customer defaults.
Either a penalty fee or a penalty rate
(next field) can be used.
2.3.30 PEN.RATE 11 S The penalty rate that is to be levied if
the customer defaults. This amount is
levied on the amount of the overdue, for
the period that it is overdue. Either a
penalty rate or a penalty fee (previous

Murabaha
field) can be used.

2.3.31 PEN.GRACE 3 S The penalty fee/rate will be applied only
if the overdues are not cleared within a
certain number of days, specified in this
field.
2.3.32 EARLY.RATE 11 S When a Murabaha contract is
prematurely closed, the bank may
refund a percentage of the unamortized
profit received in advance to the
Murabaha customer. If the early rate is
not mentioned at the contract level or
the customer level, the rate specified in
this field will be defaulted to the
Murabaha contract.
2.3.33 EARLY.CATEG 5 S When the early rate is applied to a
Murabaha contract, the P/L category
that is debited to pay the customer is
input in this field.
2.3.34 EARLY.DR.CODE 3 S The transaction code that is used when
the EARLY.CATEG (previous field) is
debited to pay the customer his portion
of the unamortized profit in case of early
closure of a contract
2.3.35 EARLY.CR.CODE 3 S The transaction code that is used when
the customer's account is credited his
portion of the unamortized profit in case
of early closure of a contract
2.3.36 AMORT.PRFT.Y.N 1 S This is the flag, which the system uses
to recognise whether the parameter
record belongs to a financial lease or
operational lease. For Murabaha
contracts, this field should always be set
to Y.
2.3.37 PRFT.ON.NET.Y.N 1 S Not used for Murabaha
2.3.38 PEN.GRACE.Y.N 1 S In cases where a penalty rate on default
is specified, the system will start
charging such rate on the expiry of the
number of days given in PEN.GRACE
field. If this field is set to Y then the rate
will be applicable from the beginning of
the grace period (i.e the date of default).
If set to N, the rate will be applicable
after the grace period has expired.
2.3.39 PRA.PL.CATEG 5 S Not used for Murabaha
2.3.40 PRE.APP.ENTRIES 1 S The valid values are YES or NO
2.3.41 GOODS.TR.CATEG 5 S A valid record in Category table
2.3.42 PUR.ORDER.CATEG 5 S A valid record in Category table

Murabaha
2.3.43 PRE.APP.TXN.TYPE 4 S A valid record in

FT.TXN.TYPE.CONDITION file
2.3.44 ACCRUAL.CHARITY 1 S
2.3.45 CU.CHARITY.CATEG 5 S A valid record in CATEGORY file
2.3.46 CHARITY.PAY.CATEG 5 S A valid record in CATEGORY file
2.3.47 ACCR.CHARITY.FREQ 5 S The frequency to be entered. The valid
values are D_M_Q_Y
2.3.48 FWL.CU.PURCHASE 5 S A valid record in CATEGORY file
2.3.49 FWL.REPOCESS.CATE 5 S A valid record in CATEGORY file
G
2.3.50 FWL.PAYMENTS.PFT 3 S A valid record in
LMM.CHARGE.CONDITION file
2.3.51 FWL.REPOSSES.PFT 3 S A valid record in
2.3.52 FWL.REPOSSES.LOSS 3 S A valid record in
2.3.53 FWL.RESELL.PFT 3 S A valid record in
2.3.54 FWL.RESELL.LOSS 3 S A valid record in
2.3.55 FWL.EM.PIN 3 S A valid record in
2.3.56 TXN.LIMIT.AMT 19 S The transaction limit amount
Figure 2 - IS.H.PARAMETER

Murabaha
ISB Cost Types
IS.H.COST.TYPES
File Type: H
About This File
This table is used to create cost types for material and immaterial costs that might be incurred
during the life of lease contract for maintenance and repair of the asset.
IS.H.COST.TYPES - Field Description and Population Rules

2.4.0 @ID 4 S Id should be any numeric value
2.4.1 DESCRIPTION 35 M Description of the cost type
2.4.2 EXP.CATEG 5 S The Profit and Loss Category to which
the cost should be debited (field
EXP.CATEG) in case of additional costs
at the time of purchase or immaterial
costs incurred during the life of
murabaha contract.
2.4.3 CAP.EXP.CATEG 5 S This is an internal account category

code, which should be debited initially
for material costs incurred during the life
of murabaha contract. And then on a
daily basis there will be amortisation of
cost from EXP.CATEG PL to this
internal account.
2.4.4 PROV.CATEG 5 S As OFS.GLOBUS.MANAGER is being
used to process some of the
transactions through FT, these FT's
could go in INAO status due to
OVERRIDE.CLASS. In order to avoid
this, all OVERRIDE.CLASS IDs being
used onsite should be set-up in
OVERRIDE.CLASS field
2.4.5 LOCAL.REF 35 M Local ref fields
Figure 3 - IS.H.COST.TYPES

Murabaha
ISB Commodities
IS.H.COMMODITY
File Type: H
About This File
The ID of this file should have a numeric value. This file is meant to give a description to various
types of commodities that are purchased and leased by the bank (e.g. land, houses, cars,
equipment etc).
IS.H.COMMODITY - Field Description and Population Rules

2.5.0 COMMODITY.CODE 4 S The id used for defining the commodity
2.5.1 DESCRIPTION 35 M Description of the commodity
2.5.2 UNITS 15 S Commodity in units. It could be acres,
square feet, etc
2.5.3 TWQ.FLAG 5 M Contains YES or NO
2.5.4 LOCAL.REF 35 S Local ref field
2.5.5 PROD.CODE 5 M A valid id in IS.H.PRODUCTS table
Figure 4 - IS.H.COMMODITY

Murabaha
MURABAHA Accounting Entries
Action Accounting Entries Entry

type
Request and DR MURABAHA.TRANSIT.ACCT Online
approval
CR MURABAHA.PURCHASE.ORDER
Purchase Order Reverse Approval Entries Online
Authorization
DR - MURABAHA.PURCHASE.ORDER
CR - MURABAHA.TRANSIT.ACCT
Asset Purchase Value
If single supplier/asset
DR - MURABAHA.PURCHASE.ACCT
CR - SUPPLIER.CURR.ACCT
If Multiple Supplier/Asset
CR SUSP.INTERNAL.ACCT
Additional Cost(s) added to Asset Value
CR COST.CPARTY.ACCT
Additional Cost(s) Not Added to Asset Value
DR - EXPENSE.PL.CATEG
CR - COST.CPARTY.ACCT
Down Payment DR MUR.CUST.ACCT Online

CR MURABAHA.PURCHASE.ACCT
Payment to DR SUSP.INTERNAL.ACCT Online
Vendor (If Multi
CR SUPPLIER.CURR.ACCT
Supplier/Asset
flag is YES)
Authorize Asset Finance Entries Online
Finance
Murabaha DR LD RECEIVABLE (LIVEDB)
Contract CR MUR.PURCHASE.ACCT
Assign Murbaha Profit Amt to Customer Differed

profit

Murabaha
DR - MUR.PUR.ACCT with Profit Amt

CR - P/L Category (Capitalisation of Profit)
Daily Profit DR - LD Accrual COB
Amortization
CR - PL Profit Category
Monthly Monthly Profit Payments COB

(Periodic)
Instalments DR CUSTOMER.LIQ.ACCT
CR LD Accrual
Monthly principal payments
DR CUSTOMER.LIQ.ACCT
CR LD RECEIVABLE (LIVEDB)
Murabaha Early DR CUSTOMER.ACCT Online
Maturity (Without
CR LD RECEIVABLE (LIVEDB)
any PD amts)
o Any Bonus
DR P/L.ACCT
CR CUST.FEE.PAY.ACCT\
o Any Fees/Charges
DR CHARGE.LIQ.ACCT
CR P/L Acct
In case of Amount Not Paid Entry COB

Instalments not
paid (PD entries) DR - PD.ACCT
CR - LD Receivable (LIVEDB) Or LD Accrual Or Pl
Charges and Fees
PD Collection (Online or at COB)
DB - CUSTOMER.LIQ.ACCT
CR - PD.ACCT
RE- Bank to settle PD txns for Murabaha overdue Online

POSSESSION amounts through (PD.REPOSSESS.VERSION)
Entries (1/2)
DR - MURABAHA.REPOSSESS.ACCT
CR OVERDUEDB & Update MURABAHA contract
with PD amounts Settled in Field TOTAL.PD.AMT
MURABAHA.REPOSSESS VERSION
- System will check that there is no overdue
amounts for this contract in PD
- System will check that Field TOTAL.PD.AMT
in MURABAHA contract not equal zero or null

Murabaha
- Version will display Following fields to User

<TOTAL.PD.AMT>: XXXX
<TOT.MURABAHA.OS.AMT>: XXXX
<TOT.PFT.OS.AMT>: XXXX
<TOT.REPOSSESS.COST>: XXXX
- User should input Market Value for
repossess function
<ASSET.MARKET.VALUE>: < >
- System Automatically will default following
values
<MATURITY.DATE>: Today Date
<PRINC.LIQ.ACCT>:MURABAHA.REPOSSESS.ACCT
<PFT.LIQ.ACCT>:MURABAHA.REPOSSESS.ACCT
- System will update
ASSET.MARKET.VALUE in MURABAHA purchase contract
__________________________________________
RE-POSSESS Accounting Entries

- MURABAHA CONTRACT CLOSE ENTRIES
DR - MURABAHA.REPOSSESS.ACCT (with
outstanding LD Amt)
CR - LIVEDB (OS LD AMT.)
RE-
POSSESSION
DR Capitalisation of profit (SPEC Entry)
Entries (2/2)
CR Pft rcvd in adv (OS Profit AMT.) (Categ Entry)
&
- RE-POSSES Profit & Loss Entries
CURRENT.ASSET.COST = (OS asset Amt. + Total PD
Amt.)
REPOSSESS.DIFF = (CURRENT.ASSET.COST - MARKET
VALUE)
Case 1: Current Asset value greater than Market
Value (Loss Case)
DR: MURABAHA.REPOSSES.LOSS.CATEG
CR: MURABAHA.REPOSSESS.ACCT (Repossess Diff.)
Case 2: Current Asset value less than Market Value
(Profit Case)
DR: MURABAHA.REPOSSESS.ACCT (Repossess Diff.)
CR: MURABAHA.REPOSSESS.PFT.CATEG

Murabaha
Asset Market Sell Entries

Resell
DR: Customer third party current acct (to whom the bank is
selling)
CR: MURABAHA.REPOSSESS.ACCT (Asset Sell Amount)
PL Entries for Asset Resell Transaction
Sell Diff Amt.= Asset Sell Amount - Asset Market Value
Case 1: Lose Case
DR: MURABAHA.RESELL.LOSS.CATEG
CR: MURABAHA.REPOSSESS.ACCT
Case 2: Profit Case
DR: CUSTOMER THIRDPARTY CURR.ACCT
CR: MURABAHA.PROFIT.ON.SALE.CATEG
Charity Entries When repayment of penalty charges is done, the system will
for non paid PD raise the following accounting entry
overdue amounts
DR - Settlement Account Penalty Charge Paid (Given under the
'Basic Details' tab)
CR - Charity Account Penalty Charge Paid
(The Charity Account is the internal account that has to be
opened by the user, with the category the same as that
mentioned in the CHARITY.CATEG field in the parameter file).
Early Maturity In MURABAHA Lease Contract the FINAL.PAY.DATE will have COB
(Pre-Closure) Of to be set to current date.
Sale Contract
When the contract is committed and authorised, the following
entries will take place for the unamortized profit amount:
DR - CUSTOMER LIQ ACCT
CR - LIVE DB
DR - CUSTOMER INT LIQ ACCT
CR - P/L ACCT

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Reverse engineering, disassembly or de-compilation of the Programs, except to

The information contained in this document is subject to change without notice.

Except as may be expressly permitted in your license agreement for these

TEMENOS Confidential Page 2 of 51 November 2007

PRODUCT NAME MURABAHA

DOCUMENT TYPE User Guide

CONTACT BACK TO gpack@temenos.com

SPECIAL COMMENTS (1) If Field Information is Crossed Out, it

(Development / Support) Specific

TEMENOS Confidential Page 3 of 51 November 2007

Serial No Last Doc Version Author Comments

TEMENOS Confidential Page 4 of 51 November 2007

TEMENOS Confidential Page 5 of 51 November 2007

Overview of this guide

Fair knowledge in TEMENOS T24 TM

Scope of this guide

Installation, Customization Procedures, Release Information, Guidelines for testing,

TEMENOS Confidential Page 6 of 51 November 2007

TEMENOS T24 TM Modules Supported

TEMENOS Confidential Page 7 of 51 November 2007

Abbreviations used in this Guide

S Single Value Field

Murabaha Work Flow

TEMENOS Confidential Page 8 of 51 November 2007

WHAT-IF Analysis Results

TEMENOS Confidential Page 9 of 51 November 2007

TEMENOS Confidential Page 10 of 51 November 2007

TEMENOS Confidential Page 11 of 51 November 2007

TEMENOS Confidential Page 12 of 51 November 2007

TEMENOS Confidential Page 13 of 51 November 2007

TEMENOS Confidential Page 14 of 51 November 2007

TEMENOS Confidential Page 15 of 51 November 2007

Murabaha Purchase (Pre-Approval)

Murabaha Purchase (Pre-Approval)

TEMENOS Confidential Page 16 of 51 November 2007

TEMENOS Confidential Page 17 of 51 November 2007

Find below the screenshot of the 'IS.H.CONTRACTS' after authorisation.

TEMENOS Confidential Page 18 of 51 November 2007

TEMENOS Confidential Page 19 of 51 November 2007

TEMENOS Confidential Page 20 of 51 November 2007

Murabaha Down Payment

TEMENOS Confidential Page 21 of 51 November 2007

TEMENOS Confidential Page 22 of 51 November 2007

Reverse Asset Purchase

TEMENOS Confidential Page 23 of 51 November 2007

Sale Murabaha to Client

TEMENOS Confidential Page 24 of 51 November 2007

Sale Murabaha to Client

TEMENOS Confidential Page 25 of 51 November 2007

Reduce/Increase maturity dates

TEMENOS Confidential Page 26 of 51 November 2007

TEMENOS Confidential Page 27 of 51 November 2007

Partial Murabaha Payment

TEMENOS Confidential Page 28 of 51 November 2007

Postponement Murabaha Contract

TEMENOS Confidential Page 29 of 51 November 2007

Murabaha Early Maturity

TEMENOS Confidential Page 30 of 51 November 2007

Bank Settle PD Payments

Bank settle PD Payments

TEMENOS Confidential Page 31 of 51 November 2007

Re-POSSESS Murabaha Contract