At Bank Alfalah, we understand that corporations often face monetary imbalances which hinders their growth. Corporations do have access to the conventional finance for overcoming their monetary imbalance but corporations looking for Islamic modes of financing in this regard can firmly rely on Shari’ah Compliant ‘Alfalah Running Musharakah’, ‘Alfalah Istisna’, ‘Falah Tijarah Finance’, ‘Murabahah Finance’, and ‘Salam’.
Musharakah, an Arabic word which means ‘sharing’, is an ideal alternative for the interest based financing with far reaching effects on both production and distribution. Running Musharakah is based on the Islamic principle of Sharikat ul Amwal, in which all the partners invest some capital into the business. This facility is offered to our Customers who may need funds from time to time but they cannot predict the amount and time of disbursement accurately thus providing flexibility to our clients.
The Bank and Customer will enter into Musharakah, based on Shirkat-ul-Milk where in the Bank and the Customer will invest in the identified primary operating activities of the Customer’s business and participate in the profits (losses) generated by the Musharakah in proportion to their respective investment ratio.
Bank Alfalah’s Islamic portfolio also offers Alfalah Istisna for working capital requirement. Corporations involved in manufacturing and construction that require working capital (for wages, overheads and etc.) can opt for Alfalah Istisna to facilitate payments. This facility is an ideal option for corporations whose substantial portion of overheads is related to production.
Istisna is a special type of sale transaction where the buyer places an order with the seller to manufacture certain asset and upon delivery of the asset to the buyer the sale is completed.
Falah Tijarah is a short term trade finance facility designed to meet the liquidity requirements of the Bank Alfalah Islamic Customers. It is designed under the supervision of the Shari’ah Board to enable our Customers to sell their finished goods stock, meet their working capital requirements and enjoy the benefits of cash sales.
It is just like a normal trade transaction where a seller (the Customer) sells specified goods (Finished Goods) to a buyer (Bank Alfalah) on cash basis.
Once the purchase transaction is complete Bank Alfalah will appoint the Customer as agent to sell the same goods in the market to third parties generally on credit basis and Customer will deposit the sale proceeds with Bank Alfalah.
Murabaha is one of the common Islamic finance contracts. It is particular kind of sale where the Bank Alfalah expressly mentions the cost of sold commodity it has incurred, and sells it to the Customer by adding some profit. Thus Murabaha finance is not a loan given on interest, it is a sale of commodity for cash/deferred price. Bank Alfalah Islamic offers this facility to its Customer looking for Short term financing solutions.
Bank Alfalah’s portfolio expands to accommodate the needs for agricultural sector. We understand that agriculture being the back bone of the country’s growth is often faced by working capital problems. Thus, Bank Alfalah offers Salam to accommodate this sector’s requirements. It is contract in which Customer undertakes to supply some specific commodity(ies)/asset(s) to Bank at future date in exchange for an advance price fully paid at spot. Hence, the price is paid in cash whereas delivery of the purchased goods is deferred.