We provide our customers with the opportunity to choose from our Islamic modes of financing that suits their needs such as
- Murabaha (cost plus mark-up agreement)
Murabaha is a contract in which the customer requests for the Islamic financial institution to purchase a commodity and sell it to him/her at a cost plus mark-up will be on a deferred payment basis. The cost of the commodity is paid to the supplier of the goods delivered directly to the institution or to the customer.
- Mudarabah (Profit sharing)
Mudarabah is a profit sharing contract in which one party offer the funds (investor) and the other (the financial institutions) invest and manage the fund. Its a mutual agreement between the investor and the specialist with the expertise. The investor (Rabal Mal) is the dormant partner and the bank is the manager of the funds (Mudarib). Profits are shared at a fixed ratio while any loss is borne by the owner of the funds provided that the mudarib is not negligent in the investment of the funds.
- Musharakah (partnership financing)
Musharakah is referred to as joint venture agreement where both the bank and the customer contribute towards the funds required for the venture in the agreed proportion in short it is base on equity participation between the Islamic Financial Institution and a client.
- Istisna’a (Contract of manufacture)
This is where the bank agrees to finance the manufacture or production of a product and the payment is made upon completion and delivery of the item in question. Income generated from providing this product is small (less than one percent of total investment income). Istisna’a is currently advanced to staff.
- Ijarah (Leasing)
This is similar to conventional leasing operating leases where the income generated is in the form of rental income accruing to the bank.
This financing mode is used mostly for the financing of agricultural sector. The seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot. The price is in cash but the supply of goods is deferred.