Working Capital Finance Solutions for short term financing requirements Part of the wide range of Shariah complaint solutions for our customers are Murabaha, Tijarah and Istisna’a, designed to meet working capital requirements. For example, if you need finance for purchasing raw materials for your industry or are trading in goods then you could use Murabaha or Istisna’a to meet your financial needs. Murabaha One of the most common modes of finance employed by Islamic Banks, Murabaha is based on the exact requirements of each customer. It can be defined as a sales transaction where Meezan Bank purchases the commodity and sells it after adding an agreed profit. Thus, it is not a loan given on interest - it is the sale of a commodity on a deferred price. Hence Murabaha involves the purchase of a commodity by Meezan Bank on behalf of a customer and the subsequent resale to the customer on cost-plus-profit basis. The cost and profit margin to the bank is expressly disclosed to the customer. Simply put, rather than advancing money to the customer, Meezan Bank buys the commodity from a third party and sells it to the customer at an agreed price, which includes an element of profit. So what is the difference between Murabaha and a Sale? A simple sale in Arabic is called Musawamah - a sale that does not involve disclosing or referring to the cost of goods sold. However, when the cost price is disclosed to the client, it is called Murabaha. Learn More Istisna’a Istisna’a is a sale transaction where a commodity is transacted before it comes into existence. It is an order to manufacture a specific commodity for the purchaser. The manufacturer (our customer) uses its own material to manufacture the required goods. In Istisna’a, price is fixed with the consent of all parties involved. Similarly all other necessary specifications of the finished product are agreed beforehand. Istisna’ as a mode of financing Istisna Finance is used to cater for the working capital requirements of a business involved in the manufacturing of goods. It is ideally suited for exporters and manufacturers who have export orders in the shape of Sight/Usance Letter of Credit/ Sight Export Contract D/P/ Usance Export Contract D/A. Learn More