Murabaha is simply a sales contract with a fixed price of certain goods or items, with pre-agreed profit margins.

Murabaha enables Al Salam Bank to avoid speculative trading. No purchase is made unless the customer identifies the items he wants to buy from any seller. Al Salam Bank fixes the deal for him along with the profit. A Murabaha must fulfill the conditions of a valid sale transaction such as the seller's established ownership of the commodity, its present physical availability, its use not being against Shariah principles, and the sale being unconditional. The payment of Murabaha goods can be made to the bank by a client on sight or on a deferred payment basis.

Local Murabaha deals with the availability of goods in the local market, while foreign Murabaha looks at goods that are imported on letter of credit or collection basis from outside the country.

The period of Murabaha financing varies based on the nature of the purchases and the working capital cycle of the customers. Murabaha for raw materials and finished goods is typically from 90 to 180 days while the same for machinery and equipment could extend to five years.