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IFB Financing

Interest Free Banking Financing Products

IFB financing is a mode of financing where BOA sells a specified asset at a mutually agreed profit rate added on the purchase cost to be repaid

Murabahah Financing

Is a mode of financing where BoA sales a specified asset at a mutually agreed profit rate added on the purchase cost to be repaid. The payment will be a defined repayment schedule in lump sum or in evenly distributed installments;

The price of goods and BoA’s profit on Murabaha transaction is fixed and is known by customers of BoA at the time of contract

Product Features and Benefits

  • Revolving financing facility
  • Merchandise financing facility
  • Import Letter of Credit facility
  • Pre-shipment export financing facility
  • Livestock Export financing
  • Motor Vehicle financing
  • Machinery and equipment purchase financing
  • Investment financing for enterprises operating in Industrial parks
  • Partial financing
  • Agricultural term financing
  • Import Letter of credit settlement financing
  • Financing/Loan Buyout

Ijarah (Islamic Leasing)

Ijarah is a shariah-compliant leasing arrangement. BoA purchases a specified asset (e.g., vehicle, machinery, and building) and leases it to the customer for an agreed rental payment and lease period. The Bank provides a unilateral promise to gift the asset to the lessee at the end of the term.

Product Features and Benefits

  • Provides the use of a high-value asset without the need for large upfront capital expenditure
  • Fixed and known lease payments for better financial planning
  • The leased asset is registered in the customer′s name and serves as collateral
  • Maximum lease term of 10 years or the asset′s economic life, whichever is lower
  • Covers a wide range of assets, including Motor Vehicles, Machinery, and Building leases

Istisna’

Istisna’ is a project financing contract where BoA agrees to finance the manufacture or construction of a specific asset (e.g., machinery, buildings), with payments made based on project progress. The completed asset is delivered to the customer at a pre-agreed price.

Product Features and Benefits

  • Tailored for medium to long-term project financing needs
  • Flexible payment schedules aligned with project milestones (″Un-Planned Bill″ basis)
  • Can be used for constructing buildings, manufacturing equipment, or other major assets
  • Financing tenure can extend up to 15 years from delivery, and up to 20 years exceptionally
  • Suitable for large-scale investments, including those in Industrial Parks

Bai’ salam Financing

Bai’salam is a type of financing through which the Bank pays the full contract price of goods/commodities in advance at the time of contract for the purchase of goods/commodities that will be delivered by the customer/supplier at a specified time/date in the future. The Bank sells the same goods/commodities to a customer/third party through an independent Second Bai’ Salam Agreement.

Product Features and Benefits

  • This product shall be used to address the short term working capital requirements of farmers/producers/manufacturers of Goods/Commodities tradable on market
  • Purchase price in Bai’ Salam shall be fully advanced to the seller/customer at the commencement of the contract
  • Bai’ Salam arrangement shall not be used as a buy back facility where the seller in the first contract is also the purchaser in the second
  • The mark- up profit agreed will not be changed till the end of financing period
  • The tenure of the finance will range from one to three years or depending on the production cycle of the business

Diminishing Musharakah

Diminishing Musharakah is a declining partnership financing arrangement where BoA and the customer jointly purchase a property or asset. The customer leases the Bank’s share of the asset and makes periodic payments that gradually purchase the Bank’s ownership units. Over time, the customer’s ownership increases until they become the sole owner.

Product Features and Benefits

  • Enables gradual ownership of a high-value asset (like a building or business establishment)
  • Through a structured partnership
  • The customer′s rental payment decreases over time as they purchase more of the Bank′s share
  • Ideal for long-term asset acquisition with a maximum tenure of 10 years
  • The asset is registered in the customer′s name from the outset, providing security and sense of ownership
  • Composed of a joint ownership agreement, a rental agreement, and a separate undertaking to purchase units
  • Provides an early termination option, allowing the customer to purchase all outstanding units before the tenure ends
  • A shariah-compliant alternative to conventional mortgage or long-term asset financing

Tijarah (Finished Goods Financing Facility-i)

Tijarah is a sale and agency-based financing facility where BoA purchases finished goods from a customer (manufacturer) for immediate cash, providing working capital. BoA then appoints the customer as its agent to sell those goods on its behalf.

Product Features and Benefits

  • Provides immediate working capital by converting finished goods inventory into cash
  • The facility can be structured as a one-time purchase or a revolving line of credit
  • The customer acts as the Bank′s agent, leveraging their market knowledge and sales channels
  • Primarily offered to corporate customers with a clean track record
  • Short-term facility with a maximum tenure of 180 days

Tawarruq

Tawarruq is a liquidity financing solution where a customer purchases a commodity from BoA on a deferred payment basis and then independently sells it in the market for immediate cash. It is designed to provide shariah-compliant liquidity without a specific asset purchase need.

Product Features and Benefits

  • Provides shariah-compliant liquidity for working capital or other general purposes
  • Short to medium-term financing, settled within a maximum of three years
  • Involves high-demand commodities to ensure easy marketability
  • The customer obtains cash directly from a third-party buyer, not the Bank
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