Lahore, July 14, 2015: Meezan Bank, Pakistan’s leading Islamic bank, executed the largest Musharakah transaction ever in the history of Islamic Banking in Pakistan amounting to Rs. 9.5 Billion with Punjab Food Department (Government of Punjab). The purpose of the transaction was to help Punjab Foods Department in financing its procurement of wheat in a Shariah-compliant manner.
The structure of this transaction is based on Musharakah (Shirkat ul Aqd) -which is the recommended form of financing according to classical jurists as well as contemporary scholars and experts in Islamic Finance. Musharakah is a form of partnership where the financier acts as a partner of the subject company and shares in the profit, based on a pre-agreed profit sharing ratio.
This transaction demonstrates the strength of Meezan Bank and Islamic Banking in Pakistan and exemplifies the ability of Islamic Banks to now handle very large ticket financing transactions under the Musharakah mode of finance.
Also, the transaction has significantly increased the percentage of Meezan Bank’s total financing portfolio done under Shirkat al Aqd and brings the total financing offered through Musharakah to 25% (as of July 15, 2015) from 16% (Dec 31, 2014), which is one of the largest percentage of Shirkat ul Aqd based financing in the financing portfolio of any Islamic Bank in the world.