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Islamic Finance


  Murabaha Ijara Istisna Tawreed Mudaraba Musharaka Wakala & kafala
Concepts
Sale at cost + Profit
Bank purchases goods from third party and sells them to the customer. The cost and profit disclosed to the customer. Settlement of murabaha price can be deferred (on monthly, quarterly, yearly basis...)
Lease
Bank purchases an asset or service then leases its usufruct to the customer for predetermined regular rent payments. May include option of ownership transfer at lease end (only for Assets.)
Order to Manufacture
Buyer request Seller to manufacture or construct assets under certain specifications, delivery deferred to a future data whereas price could either be paid at spot or in the future.
Sale of Consumables
Buyer request seller to procure consumables/perishable goods with certain specifications, delivery deffered to future date whereas price could either be paid at spot or in the future.
Business Partnership
Partnership between investor
(Rab ul maal) and investment manager (Mudarib) with pre-agreed profit ratio.
Equity Partnership
One party's funding is invested along with another party's fund - with pre-agreed profit distributions, while loss is borne propotionally based on capital contributions.
Agency(Wakala)
One party acts as an agent on behalf of other.

Guarentee(Kafala)
Bank acts as a guarantor for the Beneficiary on behalf of the client.
Applications
Finance purchase of raw material, supplies, parts, fixed assets, etc.

Can be used to meet general liquidity requirements or finance Receivables.
Lease of fixed asset (property, plant, machinery, vehicles, etc.) or services. Facilitates purchase of goods and fixed assets.

Construction of property, plant,
infrastructure projects.
Facilitates purchase of perishable and consumable goods (medicines, fruits and vegetables etc.) Profit baring savings/term investments accounts.

Facilitates general financing requirements.
Facilitates general business requirements such as acquisition of fixed asset etc. Wakala:
Financing products, L.Cs, payments, collections, other banking services.

Kafala:Gaurantees, LCs

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