| Islamic Banks Financing Transactions Features:
1. Sharing the profit based on sharing the resources. Where Islamic bank participate in risk and reward of the asset.
2. Prohibition of Interest bearing lending. Income is earned through sale or leasing contracts.
3. Share profit & accept Loss as the case may be on the assets r the business contracts.
4. In case of late payment or default by the client, there will be no penal charges. However, to maintain a payment discipline, at the time of agreement the client would undertake that in case of late payment it will give some amount in charity which will be consumed by the bank in charity purposes only. This contribution to Charity Fund shall not constitute income of the bank.
5. The bank would invest Funds in only Shariah Compliant forms of financing.
Products of DIBPL
Following are some of the Dubai Islamic Bank Pakistan Limited (DIBPL) financing products along with their relevant financing structures:
Dubai Islamic Home Finance
DIBPL offers Home Finance Facility based on Shirkat-ul-melk cum Ijarah to fulfill the Housing needs of Individuals. It is a combination of two contracts namely Musharakah and Ijarah. As per this product, the Bank and the customer form a Musharakah to purchase the asset. After this the bank leases its share to the customer for a pre-specified term through Ijara Agreement.
Dubai Islamic – Consumer Durable Finance
DIBPL as a symbol of innovative approach, had introduced Consumer Durable Finance (CDF) in 2013-14 to offer a Shariah complaint way for its consumers to purchase Home Appliances, Furniture, Bikes, Solar Panels, Cell-Phones, and Generators etc. on easy monthly installments. The Consumer Durable Finance product is based on the concept of Musawamah (a bargaining sale without disclosing or referring to what the cost price is).
Dubai Islamic – Personal Finance
DIBPL is the first Islamic bank in Pakistan to offer a Shari’a compliant “Personal Finance”facility based on the Islamic Finance concept of “Musawamah”. The financing facility can be availed and utilized for financial needs such as education, marriage, medical expenses, credit card loans settlements, conventional loans settlements or meeting any other emergency needs in “HALAL/ISLAMIC” way.
Dubai Islamic – Auto Financing
DIBPL is providing Auto Financing under the Shari’a principle of Shirkat-ul-Melk cum Ijara. This kind of “Sharika” may come into existence if two or more persons purchase an asset which will be owned jointly by them and the relationship between them with regard to that property is called “Musharaka”. Here this relationship has come into existence at their own option, as they themselves elected to purchase the equipment jointly. In this Auto Shirkat-ul-Melk cum Ijara product, DIBPL and the Customer form a Musharaka to purchase a vehicle and then DIBPL leases its share to the Customer for a pre-specified term through an “Ijara/Lease Agreement”.
Once the Lease Agreement is signed between the partners, the active relationship between the two partners, will be that of a lessor-lessee relationship with all its implications and consequences. However, in case of total loss or non-reparable partial loss or default by the Customer, the Lease Agreement shall be terminated and the Musharaka rules will apply.
Dubai Islamic-Murabaha
Where transaction is done on a “cost plus profit” basis i.e. the seller discloses the cost to the buyer and adds a certain profit to it to arrive at the final selling price. Mainly used for Procurement of Raw Material; for meeting working capital needs of trade and industry
Istisna cum Wakalah
Istisna’ is a contract of sale of specified items to be manufactured or constructed and delivered by the manufacturer or builder (contractor) to the customer upon completion. Islamic banks after getting the delivery of the manufactured goods, sell the goods normally, through their agents in the market. Our corporate customers who are in manufacturing business utilize this product to meet various working capital needs.
Tijarah
Tijarah is used for providing financing facility in transactions where final / transformed goods are available for sale. This facility enables our corporate customers to sell their finished goods, meet their working capital requirements and enjoy the benefits of cash sales. Tijarah facility can be availed by trading and manufacturing concerns and can also be used to facilitate customers to convert their interest based financing facilities to Islamic banking.
Running Musharakah
This is a Shirkat-ul-aqd based financing facility offered to the customers where the Bank participates in the operating activities of the customer and shares profit and loss as per the actual performance of the business. This product is also used as a viable financing solution for Service Industry and Travel Agents whose financing needs are generally not addressed by other Asset backed products.
Wakalah Istithmar –
Wakalah Istithmar is an Investment Agency whereby one party (principal – bank) appoints another party (customer) as its agent, to invest the capital in agent’s working capital.
Shirkat-ul-Melk cum Ijarah
It is a combination of two contracts namely Musharakah and Ijarah. As per this product, the Bank and the customer form a Musharakah to purchase the asset. After this the bank leases its share to the customer for a pre-specified term through Ijara Agreement. This Shariah Compliant long term facility is utilized by our customers to finance capital expenditure, plant expansion, BMR etc.
Diminishing Musharakah
Diminishing Musharakah is a form of partnership, which ends with the complete ownership of a partner (customer) who purchases the share (in the form of Units) of another partner (Bank) in that project by a redeeming mechanism agreed between both of them. This product is most commonly used for the financing of fixed and movable assets, long term projects, etc.
Working Capital
Salam Cum Wakalah
Bai Salam is the purchase of a commodity for deferred delivery in exchange for immediate payment. it is a type of sale in which the price is paid at the time of contracting while the delivery of the item to be sold is deferred. Islamic banks after getting the delivery of the manufactured goods, sell the goods normally, through their agents in the open market.
Salam is an exception to two Shariah conditions for a sale transaction to be valid i.e. subject matter of the transaction should exist and be under ownership/possession of seller. our corporate customers either trader or manufacturing segment utilizes this product to fund their working overheads or even finance the whole cost of goods sold.
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