Islamic Concept
Islamic Concept Applicable To Trade Finance Products
Wakalah (Agency)
Wakalah refers to a contract where a party authorizes another party to act on behalf.
Products under Wakalah :
- Inward Letter of Credit-i
- Outward Letter of Credit-i
- Inward Bills for Collection-i
- Outward Bills for Collection-i
Murabahah (Cost-Plus Profit)
Murabahah is a “cost-plus profit” sale contract. It is a facility granted to bank’s client for financing their short term working capital requirement by way of lump sum deferred payment cost plus profit.
Products under Murabahah:
- Murabahah Working Capital Financing-i
- Accepted Bills-i (Purchase/Import)
- Outward Letter of Credit-i
<!–
Musyarakah (Joint Venture)
Musyarakah is defined as a joint venture on profit / loss sharing between a bank and its client whereby the client has to contribute part of the capital in a joint venture project. The profit derived from the project shall be distributed at a profit ratio as agreed between the bank and its client.
Products under Musyarakah:
- Outward Letter of Credit-i
–>
Kafalah (Guarantee)
Kafalah is a contract of guarantee in which one party guarantees the fulfillment of a claim or performance of an obligation which is due to another party in a case of default.
Products under Kafalah:
- Shipping Guarantee-i
- Bank Guarantee-i
Bai’ Dayn (Debt Trading)
Bai’ Dayn refers to the sale of a debt arising from trade and services transaction in the form of a deferred payment sale. The client sells this debt to the Bank at a discount.
Products under Bai’Dayn:
- Bai’ Al-Dayn Working Capital Financing-i
- Foreign and Domestic Bill Purchased-i
- Accepted Bills-I (Sales/Export)
