Get Financing For Your Manufacturing/Construction Business Staying True To Your Values
Istisna is a sale contract which is executed for goods which needs to be manufactured or constructed as per customer’s specification, with the obligation of the seller (manufacturer) to deliver the goods upon completion.
Purpose
BAHL-IBD offers Istisna finance to meet the entire working capital finance requirements of Corporate and SME sector that manufactures / constructs assets to be sold in local and international market.
Basic Rules of Istisna
- The description and the quantity of goods must be explicitly defined.
- The price and time of delivery must be fixed.
- The price may be paid in advance, in installment or at the time of delivery.
- Manufacturer becomes the owner of the funds disbursed as Istisna price and can use it for all business requirements.
Target Market
The Manufacturer in Corporate and SME sector who qualify the BAHL's minimum credit criteria.
Difference between Istisna & Conventional Loan
| Distinguishing Factor | Istisna | Conventional Loan |
|---|---|---|
| Contract | A sale contract whereby bank purchase the asset needs to be manufactured by the customer. | A loan contract, whereby bank lends money to customer. |
| Relationship | The relationship between bank and customer is that of buyer and seller. | The relationship between bank and customer is that of lender and borrower. |
| Financing | Financing is created by paying the Istisna Price to customer. | Financing is created by granting loan. |
| Income | Income on Istisna is the outcome of sale i.e. profit. | Income is based on Mark-up on loan. |
| Customer’s Liability | Customer is liable to deliver the asset at agreed future date. | Customer is liable to repay the loan at future date. |
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