This financing scheme is for 12 to 60 months under Diminishing Musharakah Shariah modein which corporate, SME, agriculture, livestock, salaried and Pensioner can get financing facility for house construction, renovation and purchase with upper limit as per regulation and eligibility criteria of the bank.
|Name of the product||Fori Makan|
|Underlying Islamic mode||Diminishing Musharakah|
|Type of product||Corporate, SME, Agriculture, Salaried|
|Minimum and Maximum financing limit||PKR 150,001 to PKR 2,000,000 as per Prudential Regulations|
|Tenors (minimum and maximum)||12 months to 60 months|
|Rental Rate||20% declining p.a.|
|Target Customers||Salaried Person, Businessman, Self-Employed Person, Pensioner|
|Security/collateral Required||Mortgage of property, PDCs, Pledge of Gold, Pledge of vehicle, Lien on deposit, Salary A/C (any other collateral as per collateral policy updated time to time)|
DM is a type of Shirkah where one partner purchases the other partner’s share gradually. Generally in this structureof financing two partners purchase any asset jointly and their intention is that one or both partners will use this asset or will rent out their shares to each other where one Shareek undertakes to purchase the share of other gradually
Benefits of the Scheme
- This Fori Makan Musharakah model is Shariah compliant fulfilling all the basic parameters of Shariah.
- Partial risk sharing of the ﬁnanced asset.
- Can be used to ﬁnance the acquisition/construction/renovation of your assts.
- It is an ideal mode for medium to long term finance as it offers flexible financing terms to match the Customers’ requirements.
- Can be used by Salaried Person, Businessman, Self-Employed Person, and Pensioner.
The Modern Application of Diminishing Musharakah in NRSP IMD
Diminishing Musharakah allows equity participation and sharing of profit on a pro rata basis but also provides a method through which the equity of the bank keeps on reducing its equity in the project and ultimately transfers the ownership of the asset on of the participants.
In NRSP IMD Diminishing Musharakah has developed as a product to meet the financing need of customer, under this mode of financing, to avail facility for house/asset purchase, house/property construction and renovation normally. It happens as follow:
- Bank and customer undergoes Diminishing Musharakah agreement to create joint ownership in the property or construct/renovate the house jointly. A separate Musharakah agreement is executed.
- Customer as bank’s agent perform with purchase of property or purchase of inputs for construction and renovation.
- Bank and client enjoy their rights as partners as they share the risks and rewards in the ratio of their joint investment.
- Bank lease his portion in the property to client. A separate Ijarah agreement is executed.
- Client uses the asset while he pays rent to Bank in proportion of Banks’s ownership in the joint property according to the rentals schedule of Ijarah.
- Client also keep buying Bank’s shares until he acquires the complete ownership. The rent amount of the bank diminishes as its stake in the asset decreases after purchase of units.