Products

Ijarah

An Ijarah is a contract where the financier buys and leases equipment or other assets to the business owner for a fee or more often called rental income. The duration of the lease as well as the fee must be set in advance and mutually agreed. To be acceptable as an Islamic financial product, the leasing contract must meet the following conditions:

The service that the asset is supposed to provide and for which it is being rented should be definitely and clearly known to both parties; The asset remains in the ownership of the lessor who is responsible for its maintenance so that it continues to give the service for which it was rented. The leasing contract is terminated as soon as the asset ceases to give the service for which it was rented. If the asset becomes damaged during the period of the contract, the contract will remain valid; and the price of an asset that may be sold to the lessee at the expiry of the contract cannot be pre-determined. It can be determined only at the time of the expiry of the contract.

Murahaba

Murabaha is a non-participatory mode of Islamic financing where the FANM sells the asset required by its client to the client on cost-plus profit basis. The asset is purchased by the FANM and carries the risk of any loss or damage to the asset as long as the asset remains under its ownership. Upon sale of the asset, the FANM is obligated to inform the client of the exact cost incurred in the purchase of the asset and the margin of profit incorporated in the sale price. Payment against the purchase of assets by the client may be deferred in which case it would become Muajjal. The selling price once agreed cannot be changed even when the client fails to pay on the agreed date.

Musharkah

Musharakah is one of the two ideal modes of Islamic financing. The other one being Mudarabah. Musharakah is a contractual relationship formed through mutual consent of the parties for sharing of profits and losses in a joint venture. Assets in the venture are jointly owned in proportion to each partner's contribution. The profits are shared in a pre-agreed ratio. Losses, however, are incurred in proportion to each partner's investment. FANM representing share of its depositors invests funds in the joint venture alongside other investor(s).

In this method of financing two or more partners agree through a Musharkah contract to carry out a specified joint-venture economic activity. The contract specifies the kind, the amount to be contributed by each of the partners, the partnership period, and the basis for profit distribution

Musawammah

Musawammah is a general kind of sale agreement in which price of the commodity to be traded is bargained between seller and the purchaser without any reference to the price paid or cost incurred by the former.