Which leaves just one question: How on earth can it work? This spring, Shamil Bank helped Abdullah buy a car through a transaction known as murabaha, which is more distinct from mudarabah in function than in spelling. In a deal you'll never see from GMAC, Abdullah identified the Toyota Corolla he wanted, then asked the bank to buy it from the dealer for roughly 3,600 dinar (about $9,500). At the same time he agreed to buy the car from Shamil for 4,000 dinar, to be paid in monthly installments over three years. The two sales were executed almost simultaneously, but because Shamil Bank took possession of the car for a brief period of time, everything was kosher. Or rather, hilal.
The result looked a lot like interest, and some argue that murabaha is simply a thinly veiled version of it; the markup Shamil charges is very close to the prevailing interest rate. But bank officials argue that God is in the details. For example, any late fees Shamil collects must be donated to charity, and the bank cannot penalize a borrower who is genuinely broke.
