Ibra'
إبراء
Pronunciation: ib-RAH
A rebate or waiver: the creditor gives up part of what is owed, typically on early settlement.
Definition
A voluntary release by a creditor of all or part of a debt. In Islamic finance it is the mechanism for giving a customer a rebate when a Murabaha or deferred-sale contract is paid off early: the full deferred price was legally owed, so the financier grants an ibra' of the unearned portion.
Because the rebate is a gift, scholars historically held it could not be promised in the contract; contemporary standards and regulators (Bank Negara Malaysia in particular) now require financiers to grant ibra' on early settlement and to disclose the formula, treating it as a binding policy rather than a contractual term.
Related Terms
Murabahaمرابحة
A cost-plus sale where the seller discloses the original cost and adds a transparent, agreed-upon markup.
Bai' Bithaman Ajilبيع بثمن آجل
A deferred-payment sale: the price is fixed up front and paid in installments, usually higher than the cash price.
Daynدين
Debt: a fixed obligation owed by one party to another, which Islamic law protects but forbids trading for profit.
Hibahهبة
A voluntary gift with no expectation of return - used in Islamic banking as discretionary bonuses on deposits.
Ta'widhتعويض
Compensation for actual loss caused by late payment, which the creditor may keep.
Gharamahغرامة
A penalty for late payment that the creditor may not keep; it must be given to charity.
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Ibra' (إبراء) - A rebate or waiver: the creditor gives up part of what is owed, typically on early settlement. A voluntary release by a creditor of all or part of a debt. In Islamic finance it is the mechanism for giving a customer a rebate when a Murabaha or deferred-sale contract is paid off early: the full deferred price was legally owed, so the financier grants an ibra' of the unearned portion.
- A rebate or waiver: the creditor gives up part of what is owed, typically on early settlement.
- Category: Contracts
- Related: Murabaha, Bai' Bithaman Ajil, Dayn, Hibah, Ta'widh, Gharamah
- Compare related Shariah-compliant products on HalalWallet
Source: HalalWallet (halalwallet.ca)
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Reviewed by: HalalWallet Editorial Team
Last reviewed: 2026-10-01
Editorial Team, HalalWallet
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