Professional Documents
Culture Documents
Salam
Summary of the Previous Lecture
•Principles of Murabaha
•Procedures
•Application of Murabaha
Learning Outcomes
After this lecture you should be able to understand
the two modes of Islamic financing;
• Uses:
– Purchase of commodities (financing for production
of agricultural commodities/ minerals)
– Liquidity requirements of sugar mills, etc.
Salam: Shariah Legitimacy
• Allah says “O you who believe when you deal with each
other, in transactions involving future obligations in a fixed
period time, reduce them to writing” [2:282]
Definition
•It is an order to producer to manufacture a
specific commodity for the purchaser.
Conditions of Istisna
• the subject of Istisna is always a thing which needs
manufacturing
Parallel
Istisna Sale Istisna
Delivery of Delivery of
Commodity Commodity
• House Financing
• Project Financing
• BOT Arrangement
Ownership of Material
The Islamic bank is not the owner of Security is available with the bank.
the materials in the possession of
the manufacturer for the purpose of
producing the asset.
Delivery Risk
Islamic bank may be unable to Bank can reduce the Istisna price
received goods as scheduled due according to the Istisna agreement.
to late delivery of completed goods
and may not be able to honor the
parallel Istisna.
Summary of the Lecture