Murabahah is a sale contract whereby the seller adds a markup with cost and discloses the amounts to the buyer. Islamic banks apply this concept to finance their customers on a short- and long-term basis. In fact, about 70 per cent of the total investments of the Islamic banks in Bangladesh is based on the murabahah concept. However, the application of this concept varies from bank to bank and product to product. Some of the practices face heavy criticism from different stakeholders. This research aims to identify the application of murabahah by the Islamic banks in Bangladesh in offering various investment products and compare these practices with the Shari'ah requirements of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and other reputed Shari'ah authorities. The research adopted a content analysis approach whereby the murabahah contract documents of all full-fledged Islamic banks in Bangladesh are examined. The research further conducted interviews of Islamic banking practitioners to establish the process flow of different murabahah-based investment products and conducted focus group discussions to validate the findings. The research finds the scope for improvements that the Islamic banks of Bangladesh may consider in achieving greater compliance with the AAOIFI Shari'ah standards. The research also proposes relevant recommendations for consideration of the Islamic banks of Bangladesh. The findings and recommendations of the research would be a reference for the Shari'ah governance functions of Islamic banks including the Shari'ah supervisory boards in identifying the potential weaknesses and to take steps in addressing those weaknesses

The purpose of this paper is to examine the concept of Hire Purchase under Sharikat al-Milk (HPSM) and identify the issues in its application by the Islamic banks in Bangladesh, a major Islamic finance market, with reference to the Shariah and accounting standards of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The research identified the essential requirements of AAOIFI Shariah and accounting standards, conducted content analysis of HPSM documents and audited financial statements of Islamic banks, held a focus group discussion with Islamic banking executives and Shariah experts and interviewed professionals in Islamic banking and members of Shariah supervisory committees. Although the HPSM concept was introduced in Bangladesh in 1990, there is no standardisation in its application. The research finds several issues in the application and financial reporting of HPSM by Islamic banks in Bangladesh. HPSM is a widely used mode of financing by Islamic banks in Bangladesh. The identification of the issues underlying HPSM will attract the attention of the practitioners, Shariah scholars, regulators and standard setters to introduce better controls, compliance, regulations and standards. This research provides valuable insights into HPSM by identifying issues in its application by Islamic banks in Bangladesh. Despite its widespread use in the country, there is a significant lack of research highlighting these issues and proposing potential solutions. Addressing these issues is essential for enhancing Shariah compliance and maintaining stakeholder confidence in Islamic banking.