Ijarah

Ijarah

Ijarah is commonly used for medium- and long-term fixed asset financing, project financing, plant and machinery, equipment, vehicles, and such. It enables enterprises to acquire assets such as capital goods and high-cost equipment for which they do not have funds to make large up-front payments.

How it worksFeatures

Ijarah

Features:

Used for large financing of assets such as Buildings, plant, machinery, generators, equipment etc for long tenors. Helps align the cost of an asset with the benefit derived from the use of the leased asset

Ijarah

How it Works:

At Emirates NBD, we purchase the asset of your choosing on your behalf and then lease it to you for a particular period, in return for regular payments. After all payments have been made, ownership of the asset is transferred to you. Ijarah can only be issued for those assets that are not consumed during the course of their use.

Forward Ijarah

Forward Ijarah

Fund your asset construction in a Shari’ah compliant manner with Forward Ijarah. This is a type of Islamic Financing that involves the sale of a clearly specified underlying asset that is currently being produced or constructed, as well as a forward lease agreement.

How it worksFeatures

Forward Ijarah

Features:

  • Medium- to long-term financing structure for the construction or manufacture of an asset, such as a home, office, or plant
  • The completed asset is leased to the customer for a specific period; upon lease completion, asset ownership is transferred to the customer
  • Lease amounts must be known on the contract date
  • Infrastructure projects are the main examples of application
  • Provides flexibility to the customer, as payments can be made in instalments linked to project completion
  • The bank undertakes to pay the contracted developer or builder in full, or in specific stages
  • A Forward Ijarah meets individuals’ or firms' needs to fund asset construction for future delivery

Forward Ijarah

How it Works:

The bank enters into an agreement with a client to finance various manufacturing and construction needs. We undertake to pay the contracted developer or builder in full, or as specific stages of the work are completed. Once the asset is ready, it is leased to the client who then pays the bank as per the agreed payment plan.

Murabaha Finance

Murabaha Finance

Murabaha is a sale transaction where the seller discloses the cost and profit to the buyer at the time of execution of sale.

How it worksFeatures

Murabaha Finance

Features:

  • Murabaha can be used by small- and medium-sized commercial enterprises, as well as corporate entities.
  • A suitable and easy solution for purchasing any type of Shari’ah compliant asset such as raw material, semi-finished or finished goods, or even stores and spares requirements.

Murabaha Finance

How it Works:

Murabaha involves the purchase of a specific asset by the bank at your request; subsequently, the asset is sold to you at a price that includes the principal cost and a pre-agreed mark-up, on a deferred payment basis.

Murabaha financing differs from conventional financing in a fundamental way – rather than simply advancing money to a client, the bank itself buys the goods from a third party at their request. In essence, the bank takes on the risk of ownership of the asset before selling it to the client.

Musharaka

Musharaka

Musharaka is an attractive financing tool for corporate clients who require financing for general business purposes. Under a Musharaka financing arrangement, and depending on the amount to be financed, the bank becomes a partner in your business, or in a specific business segment.

How it worksFeatures

Musharaka

Features:

  • As soon as the partners contribute their capital in a joint pool, all the assets of the Musharaka become jointly owned by all of them
  • All partners can participate in the management of the business
  • All partners share the loss to the extent of the ratio of their investment

Musharaka

How it Works:

Musharaka is a contract of partnership between two or more individuals or bodies in which all the partners contribute capital and share the profit as per pre-agreed ratios, and they bear the loss, if any, in proportion to their capital contribution.

To reduce the risks of losses caused by factors other than the negligence or misconduct of the client, Musharaka financing requires that clients maintain robust corporate governance and accounting structures and agree a specific mechanism for monitoring business performance.

Tawarruq

Tawarruq

Fulfil your liquidity needs in the absence of business assets through Shari’ah compliant monetization tools. Tawarruq is a type of Islamic finance structure, which allows clients to meet their working capital and long-term financing requirements.

How it worksFeatures

Tawarruq

Features:

  • Meets all types of Shari’ah compliant financing needs
  • Flexible tenors and repayment schedules

Tawarruq

How it Works:

The bank purchases commodities from a supplier (first sale) and sells them to client (second sale). The client then sells the commodities to a different supplier to fulfil their liquidity needs (third sale).

Mudaraba Finance

Mudaraba Finance

Mudaraba Finance is a partnership between a capital provider (‘Rab Al Mal’) and a business (‘Mudarib’)

How it worksFeatures

Mudaraba Finance

Features:

  • Used for term finance and working capital needs
  • Provides flexibility in terms of utilization of funds and tenors
  • Pre-agreed profit ratio

Mudaraba Finance

How it Works:

This is a contract whereby the bank as Rab Al Mal provides capital to customer or Mudarib for investing in a commercial enterprise. Profit is shared as per a pre-agreed ratio and losses are the responsibility of the bank, except in cases of negligence, misconduct or fraud, in which case the client becomes liable.

Wakala

Wakala

Wakala is an agency contract, where the bank appoints the client to carry out specific Shari’ah compliant investment activities as per a specified plan, to generate expected returns.

How it worksFeatures

Wakala

Features:

  • Profit is distributed according to the agreed profit ratio
  • Bank specifies the returns expected from the investment
  • Client makes the investment to generate expected return

Wakala

How it Works:

In Wakala contracts, the actual profit is distributed according to the profit ratio agreed upfront. The client or ‘wakil’ is able to specify expected returns from the funds provided by the bank for an agreed wakil fee.

The wakil will then make the investment to generate a return, which is carried out for and on behalf the bank (‘Muwakkil’). Parties can agree that any profits exceeding the agreed returns can be retained by the wakil as additional incentive, along with the wakil fee.

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Emirates NBD Bank (P.J.S.C.) is licensed by the Central Bank of the UAE, Baniyas Road, Deira, P.O. Box: 777, Dubai, UAE

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