Tawarruq
التورق
Definition
Tawarruq (organized commodity Murabahah) is an Islamic financing method where the bank buys a commodity on behalf of the customer, sells it to the customer at a markup, and the customer immediately resells the commodity at market price to receive cash. Widely used for personal financing in KSA.
Why Tawarruq Matters in Saudi Arabia
Saudi Arabia's financial system is built on Islamic banking principles, making Tawarruq a fundamental concept for anyone seeking financing, investing, or conducting business in the Kingdom. All Saudi banks operate under Sharia compliance as regulated by SAMA, and understanding these structures helps you choose the right financial products, compare offerings, and make informed decisions about loans, savings, and investments.
Tawarruq vs Murabahah
| Feature | Murabahah | Tawarruq |
|---|---|---|
| Purpose | Asset purchase | Cash financing |
| Asset | Customer keeps asset | Commodity immediately resold |
| Use case | Home/car loan | Personal loan/credit card |
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