Business

Murabaha means a sale of goods by a person to another under an arrangement whereby the seller is obliged to disclose to the buyer the cost of goods sold either on cash basis or deferred payment basis and a margin of profit included in the sale price of goods agreed to be sold.

Description Specific Product Details
Name of Product: Murabaha
Basis of Pricing: A fixed profit rate OR a floating profit rate linked with a benchmark, e.g. KIBOR, is offered keeping in view the prevailing market practices/dynamics
Financing Limits:
  • Minimum: Per party limit as per SBP Prudential Regulations/as per facility approval
  • Maximum: Per party limit as per SBP Prudential Regulations/as per facility approval
Tenors:
  • For Working Capital:  Upto 1 year
  • For Fixed Assets Financing: Upto 3 years
Target Customers: Corporate/Commercial/SME
Security/Collateral: On a case to case basis, e.g. hypothecation, charge on assets, mortgage of properties, pledge, lien on deposits, etc. as per facility approval

 

Repayment
Murabaha Cost Component
(i.e. Principal):
  • 1 to 3 months – bullet at maturity
  • 6 months to 3 years – quarterly/or as per facility approval
Payment of Murabaha Profit Component:
  • 1 to 3 months – bullet at maturity
  • 6 months to 3 years – Quarterly/or as per facility approval

Musawamah is a general kind of sale in which price of the commodity to be traded is stipulated between seller and the buyer without any reference to the price paid or cost incurred by the former. Thus it is different from Murabaha in respect of pricing formula. Unlike Murabaha, seller in Musawamah is not obliged to reveal his cost.

Description Specific Product Details
Name of Product: Musawamah
Basis of Pricing: A fixed profit rate OR a floating profit rate linked with a benchmark, e.g. KIBOR, is offered keeping in view the prevailing market practices/dynamics
Financing Limits:
  • Minimum: Per party limit as per SBP Prudential Regulations/as per facility approval
  • Maximum: Per party limit as per SBP Prudential Regulations/as per facility approval
Tenors:
  • For Working Capital:  Upto 1 year
  • For Fixed Assets Financing: Upto 3 years
Target Customers: Corporate/Commercial/SME
Security/Collateral: On a case to case basis, e.g. hypothecation, charge on assets, mortgage of properties, pledge, lien on deposits, etc. as per facility approval
Repayment:
  • Upto 3 months – bullet at maturity or as per facility approval
  • 6 months to 3 years – quarterly/or as per facility approval

Ijarah is a contract whereby the owner of an asset, other than consumables, transfers its usufruct to another person, for an agreed period, for an agreed consideration. In Ijarah, the corpus of the leased asset remains in the ownership of the lessor and only its usufruct is transferred to the lessee.

Description Specific Product Details
Name of Product: Ijarah for plant & machinery/equipment/commercial vehicles
Basis of Pricing/Return: Ijarah Rentals are determined by using any well known/ recognized bench mark as per prevailing market practices/dynamics e.g. KIBOR OR it can also be Fixed
Financing Limits: Minimum: Per party limit as per SBP Prudential Regulations/as per facility approval
Maximum: Per party limit as per SBP Prudential Regulations/as per facility approval
Tenors: Minimum: 1 year
Maximum: 7 years
Target Customers: Corporate/Commercial/SME
Security/Collateral: On a case to case basis e.g. exclusive ownership of Ijarah asset by the Bank, security deposit, hypothecation, charge on assets, mortgage of properties, pledge, etc. as per facility approval
Repayment: Monthly Ijarah rental payments or as per facility approval

Salam (advance payment against deferred delivery of goods) means a kind of sale whereby the seller undertakes to supply specific goods (Al-Muslam Fihi) to a buyer at a future date in consideration of a price fully paid in advance at the time the contract of sale is made. Salam can be effected in respect of ‘Dhawatul-Amthal’ which represent such commodities, the units of which are homogenous in characteristics and are traded by counting, measuring or weighing according to usage and customs of trade.

Description Specific Product Details
Name of Product: Salam
Basis of Pricing/Return: Profit on sale of Salam goods, after its delivery, to be charged, keeping in view the prevailing market practices/dynamics
Financing Limits:
  • Minimum: Per party limit as per SBP Prudential Regulations/as per facility approval
  • Maximum: Per party limit as per SBP Prudential Regulations/as per facility approval
Tenors: Upto 1 year
Target Customers:  Corporate/Commercial/SME
Security/ Collateral: On a case to case basis, e.g. hypothecation, charge on assets, mortgage of properties, pledge, lien on deposits, etc. as per facility approval
Repayment: On due date, the client will make the delivery of Salam goods (Muslam Fihi) to the Bank. The Bank will sell the Salam goods (Muslam Fihi) either directly or through its agent, to recover the amount advanced along with profit

Diminishing Musharakah is a form of co-ownership in which two or more persons share the ownership of a tangible asset in an agreed proportion and one of the co-owners undertakes to buy in periodic installments the proportionate share of the other co-owner until the title to such tangible asset is completely transferred to the purchasing co-owner. Diminishing Musharakah can be created only in tangible assets. Diminishing Musharakah shall be limited to the specified asset(s) and not to the whole enterprise or business.

Description Specific Product Details
Name of Product: Diminishing Musharakah (for commercial property/plant & machinery, equipment, etc)
Basis of Pricing/Return: The rental amount is calculated with reference to a well known benchmark as per prevailing market practices/dynamics, e.g. KIBOR
Financing Limits:
  • Minimum: Per party limit as per SBP Prudential Regulations/as per facility approval
  • Maximum: Per party limit as per SBP Prudential Regulations/as per facility approval
Tenors: Upto 20 years
Target Customers: Corporate/Commercial/SME
Security/Collateral: On a case to case basis, e.g. hypothecation, charge on assets, mortgage of properties, pledge, lien on deposits, etc. as per facility approval
Repayment:
  • Unit purchase (i.e. principal): Monthly/or as per facility approval
  • Rental payment (i.e. profit): Monthly/or as per facility approval

Istisna is a mode of sale, at an agreed price, whereby the buyer places an order to manufacture, assemble or construct, or cause so to do anything to be delivered at a future date. The commodity must be known and specified to the extent of removing any ambiguity regarding its specifications including kind, type, quality and quantity etc.

Description Specific Product Details
Name of Product: Istisna
Underlying Mode: Istisna
Type of Product: Corporate /Commercial / SME
Basis of Pricing/ Return: Floating profit rate linked with KIBOR, will be offered keeping in view the prevailing market practices/dynamics.
Financing Limits: Min / Max: Per party limit as per SBP Prudential Regulations / as per Facility approval
Tenors: To meet working capital requirements Upto 01 Year
For fixed assets Up to 03 Years
Target Customers: Corporate /Commercial / SME
Security/ Collateral On a case to case basis e.g. Hypothecation, Charge on Assets, Mortgage of property, Pledge, lien on deposits etc. as per Facility Approval.
Description Specific Product Details
Name of Product: Islamic Export Refinance (IERF)
Underlying Mode: Shariah compliant mode of finance (including but not limited to) Murabaha, Musawamah, Istisna, etc as approved by the Shariah Board of AKBL-IBSD.
Type of Product: Corporate / SME
Basis of Pricing/ Return: SBP refinance rate.
Financing Limits: Bank’s internal assessment for allocation of limit, subject to SBP’s PRs.
Tenors: As per SBP’s PRs / instruction on IERF.
Target Customers: Corporate / SME
Security/ Collateral Cash, Collateral, Pledge, Mortgage or hypothecation of asset etc or as per SBP’s PRs or Bank’s requirement.