Funding tools offered to the bank’s clients, whether the funding is for one time or revolving, direct utilization of the funding for the following purposes; Murabaha, Bay’ al-Manafa’a, Bay' al-Salam, Mudaraba, Ijara, Musharaka, Musawamah, Istisna’a, Muzara’a and Mugharasa.

Whereby the client comes to the bank and asks to buy goods or commodity and undertakes to buy it by the bank if the bank has purchased them, and therefore the bank buys these items and interference in the ownership and then sells it to the buyer called the purchaser with an acknowledged price and profit.

Murabaha often is by purchasing existing goods whether in local market to finance a local trade or imported goods from foreign markets to finance foreign trade.

Both the client and the bank is to provide part of the required capital to finance a project, whereby both the bank and the client share the profit as per the agreed percentage or as per their capital share in-case of the inexistence of a prior agreement in the contract with a profit share as such;

  • Partner share against managing and supervising
  • Profit balance after deducting partner’s share distributed according to the shares of each in the partnership agreement.

If the result of loss, the losses are distributed among the partners, each according to the proportion of his participation in the capital and management, the partner doesn’t lose any amounts otherwise percentage referred to above and partners have the right in administrating work, and some of them have the right to waive the management sufficiency and financial partnership only.

Musharaka Types

  1. Fixed partnership based on the bank financing partially in the capital of the project to become a partner in the ownership of this project, which is divided into two types:
  • Constant and continuous partnership, specialized in ongoing projects and existing companies.
  • Fixed ended partnership relevant to temporary and finished projects during a limited period of time.

2. MMP: in which the bank's partner becomes the bank gradually or at once according to the terms agreed upon in the contract participation.

An agreement made between two parties: one which provides ‘100 percent of the capital’ for the project and another party known as a ‘Mudarib’ who using his entrepreneurial skills, manages the project. Profits arising from the project are distributed according to a predetermined ratio. Any losses accruing are borne by the provider of capital (the bank). The provider of capital (the bank) has no control over the management of the project.

Mudarabah types

  • Simple Mudarabah: Whereas the bank pays full capital and the speculator initiates work and share the profit according to the signed contract between both and the loss is borne by the bank.
  • Limited profitability and ceiling Mudarabah: determined under a contractual agreement for the maximum profit share of the bank whether set or under negotiation.
  • Dwindling Moudarabah – whereas the bank pays the full capital and the speculator has the right to replace the bank by paying the capital in one go or on payments.

Ijara is renting something to someone to make use of it for a fixed rent paid on limited pre agreed installments and dates, divided into two;

Operational lease; where the asset is owned by the bank and the bank leases to the customer within a specified period at the end of the agreement the bank recovers the original cost, and during the lease period the bank will be responsible for all the expenses of origin.

Leasing (Ijara ended with ownership):

The origin is owned by the bank, and the bank purchases the client’s request which will lease during a specified period for the client to own it at the end of the agreement. client will be responsible of all maintenance and fix expense occurring and insurance and at the end of the agreement ownership is transferred to the tenant in exchange of a certain amount or endowment, the tenant shall pay the tenancy amount on specified installments and dates and in case of delay in payment, contract shall undergo annulment and previously paid amounts are considered rental allowances.

Definition: A contract whereby the payment is made in cash at the point of contract but the delivery of asset purchased will be deferred to a predetermined date.

Types of Bay’ al-salam:

  • Simple Salam: whereby the bank purchases goods and stores it then market it adhering by the market price
  • Parallel Salam: the bank purchases goods in forward buying and sells it in wholesale or deals.

Producing goods according to the buyers demand and as per the required criteria, delivered as per the agreed date and price. Istisna’a is funded in accordance with agreements arranged to funding procedures as is the case in residential and investment buildings, whereas the funder bank is the first party and the producer (contractor) is the second and the landlord the third.

Istisna’a Types:

  • Simple Istisna’a; whereas the bank is the financer and the contractor is the producer.
  • Installed Istisna’a: in case the Istisna’a is large and required times to execute and payment is made on installments and according to the agreement and quantities achieved.
  • Parallel Istisna’a: the bank starts funding procedures in parallel through producing companies or in contract with third parties, in a condition of not link between the two agreements.

Istisna’a Sukuk (bonds): the bank issues the sukuk (bonds) as the seller, the subscribers are the purchasers to the sample produced, and the subscription outcome is the cost of the produced samples, whereas the bondholder owns the produced sample and deserves the sales price or the sales price of the produced sample in parallel if available.

Muzara’a and Mugharasa: An agreement to plant between the peasant and the landlord, outcome to be divided by shares agreed on during the contract.

Mugharasa agreement: in the trees, whereas the worker plants a white land for the account of its owner, and once the trees starts production the worker takes part of the trees and the land as his wage pay.

Musaqah (watering) agreement: an agreement to push the trees and vines to whom can fix it, with the acknowledged part of its fruits,

a type of partnership made between the trees from one side and the soil from another, whereas the fruits are between them based on a certain agreed percentage.

is an Islamic term to finance assets, a limited finance whereas the customer requests from the bank to purchase certain goods and the bank purchases from a third party with a price the customer has no power to decide on and with a profit unknown by the customer. If the customer agrees on the goods, he pays the amount to the bank on installments as per an agreement and the bank applies the sales bargaining on the goods purchased from the market such as cars, electronics and others.

Musawamah terms include;

  • Is the first and most popular Islamic trading tool in markets
  • The price is determined with the reaction of the market demand and supply.
  • Full satisfaction between the seller and buyer, regardless of the good price.