Commodity Murabaha for cash advances
The Product is used for cash advances through the purchase & sale of metals.
- The banks buys commodities in specific quantity based on the customer’s request and at target cost price.
- The banks sells the commodities to the customer at cost + profit price and at deferred payment terms.
- The customer or its agent liquidate the commodities through the sale to the same broker or any other 3rd party.
Letters of Credit (L/C) Murabaha
Import finance through letters of credit & Murabaha
The Product is used to finance import activities whereby goods are imported in the name of the bank through a documentary letter of credit:
- The bank purchases the goods/assets from a supplier through L/C opened by the bank on behalf of the customer. The customer may fill the application due to full knowledge of the good, supplier and other terms.
- Upon arrival of the Goods (constructive or physical ownership) , the bank offers the sale of goods to the customer describing the sale transaction and payment terms.
- The Goods/Assets are sold to the customer (Murabaha contract is signed) upon customer’s acceptance of the sale transaction terms.
- The bank may appoint the customer or any other party (for a fee) as gent for all matters related to the purchase and sale transaction.
Murabaha Finance (Goods & Real Estate)
Murabaha finance for working capital needs
The Product is used to finance the purchase of goods and real estate in order to be used by the customer in the production or the sale to a 3rd party.
- The bank purchases the assets from a supplier based on the client's documented request and undertaking to buy.
- Upon the assets physical/constructive ownership by the bank the customer and the bank on agree on the sales terms.
- A Murabaha contract is signed between the bank and the customer.
Ijarah (Equipment & Real Estate)
Ijarah/Leasing of equipment and real estate
The Product is used to finance the leasing of assets/real estate owned by the bank to the customer. The leasing contract may end by transferring the ownership of the leased asset to the client if warranted in the lease contract.
- The bank purchases equipment/real estate once the customer submits assets purchase request and a promise to lease the assets.
- The bank executes a Leasing/Ijarah contract with the customer.
- In the event the customer wishes to own the leased asset earlier than the term of the Lease contract, an early Ownership Contract must be executed between the bank and the customer.
- Once the customer fulfills all the obligations of the Lease Contract, the bank may execute a contract to donate the leased asset to the customer.
Istisna’a (construction finance)
Istisna’a/Construction Finance of commercial, residential and industrial real estate units
The Product is used to finance the construction of real estate units (commercial and residential) and factories etc. The customer has to request and execute Istisna’a contract with the bank in order for the bank to proceed with constructing the real estate unit on behalf of the customer. Upon the completion of the project, the bank may sell or lease the unit to the customer.
- The customer submits Istisna’s request to the bank.
- The bank executes Istisna’a contract with the customer.
- The bank executes parallel Istisna’a with a developer/ contractor.
- Upon the completion of the project, the bank issues instructions to the developer to hand over the unit to the customer.