Islamic Assets - Summit Bank

Islamic Assets

1. Ijarah – Corporate (Machinery, Commercial Vehicles etc.):
is a contract in which the Bank buys and gives on rent a productive asset to person short of funds and in need of that asset. Ijarah contract mentions the duration of the contract and the rent for the period. No consumable asset can be given on Ijarah. At the end of Ijarah the parties may agree for the sale of asset by the lessor to the lessee at an agreed upon price. Summit Bank care for their Corporate/SME/Commercial customer through facilitating against all tangible assets.

2. Ijarah – Consumer (Auto-Finance):
A lease compatible with Shariah law. Under the structure, SUMMIT BANK as the owner of a vehicle gives
the individual ability to use the asset in exchange for a periodic rental. Under an Ijarah, the terms of the agreement are clear and known to customer. A very reasonable rental are offered by SUMMIT BANK with unique and perfect combination of services.
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3. Murabaha:
Sale of commodities and assets at cost plus an agreed profit whereby the seller informs the purchaser of the cost at which he purchases the product and also discloses the amount of profit. Under murabaha financing, the customer is usually made agent for the procurement of goods he requires and upon procurement the goods are sold to the customer on deferred payment basis. The customer makes payment for the goods as per pre-agreed schedule where SUMMIT BANK offers this
product to customer in very efficient manner.

4. Diminishing Musharkah – Corporate (Machinery, Commercial Vehicles etc.):
Represents an asset in joint ownership whereby a partner promises to buy the equity share of the other partner until the title to the equity is totally transferred to him. In this arrangement SUMMIT BANK gives one partner gives his share in the asset to other partner on rent.

5. Diminishing Musharka – Consumer:
A form of partnership in which one of the partner’s (Customer) promises to buy the equity share of the other partner (SUMMIT BANK) gradually until the ownership of the equity is completely transferred to one of the partner. This transaction starts with the formation of a partnership, after which buying and selling of the equity take place between consumer & SUMMIT BANK.

Understanding trends in consumer product markets, and the financial needs of consumers, SUMMIT BANK is now designing Consumer Banking services through a dedicated division. SUMMIT BANK aims to aggressively grow its existing product portfolio by introducing products in phases. We provide services to consumer focused and competitive approach while closely following technological developments. With a clearly defined market segment and a solid strategic intent supported by a Shariah based modern and reliable infrastructure, Summit Bank is ready to reach new heights in Consumer Banking services through offering House & Vehicle under Diminishing Musharka.

6. Salam:
is a sale whereby the seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot. The contract of Salam creates a moral obligation on the Salam seller to deliver the goods. The Salam contract cannot be cancelled unilaterally once signed. (reference: Introduction to Islamic Finance– Mufti Taqi Usmani).

7. Tijarah:
Is a working capital solution especially for those customers who sell their inventory on credit and require funds for operations during the credit period. In Tijarah, the Bank purchases the finished goods from the customer and after taking the delivery, sells the goods in the market.

8. Istisna:
is a sale contract between a contract owner and contractor whereby the contractor based on an order from the contract owner undertakes to manufacture or otherwise acquire the subject matter of the contract according to specifications, and sells it to the contract owner for an agreed upon price. The payment for the sale may be in advance, credit, installment or any other maturity term.

9. Musharakah:
Types of partnership agreement in business with distribution of profit in agreed ratio and distribution of loss in the ratio of capital invested This is a Shirkul-aqd based financing facility offered to the customers where the Bank participates in the operating activities of the customer and shares profit and loss as per the actual performance of the business. This product is also used as a viable financing solution for Service Industry and Travel Agents whose financing needs are generally not addressed by other Asset backed products.

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Last Updated 2023-03-20

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