Detoxification of Forfeited Collaterals of Banks Using Murabaha Bonds for Liquidity with Options

• Main Authors: Mohammad Naghi Nazarpour, Abbas Dadjouye Tavakoli
• Format: Article
• Language: fas
• Published: Iran Banking Institute 2018-06-01
• Series: مطالعات مالی و بانکداری اسلامی
• Subjects: Bank Financing; Murabaha Bonds; Forfeited Properties
• Online Access: http://jifb.ibi.ac.ir/article_65128_162c1285ac2a6530e6667f279d3f97f5.pdf

Using a descriptive-analytical method, this study proposes a new method to make profit from forfeited properties that can be employed by the banking system to provide cheap financing. The main hypothesis of this study contends that Murabaha bonds for providing liquidity along with their derived instruments such as legitimate put and call options, with a controlled return risk, can help banks with the frozen profit of forfeited properties and provide cheap financial resources, compared to the current state of the money market. Banks can use this method to sell such assets based on the market rate (calculated through discovering the prices in commodities exchange) and using Murabaha bonds, while postponing the delivery of properties up to two years. This will provide them with the much needed liquidity while taking advantage of the rent until the deadline for delivery, before which, the banks will be entitled to rent out the property according to the contract. At the delivery time, the property will either be handed over to the intermediate company (SPV) to be sold in the market and the sums divided among bond holders; or the manner of final settlement will be determined by granting the rights for call option and put option respectively to the bank and the intermediate company on behalf of the bond holders. Considering that there is no obligation in call and put options as a second contract, Murabaha contract will not lead to Ba'i al-'Ayn (sales in cash of a property just bought on installment).