USES OF FUNDSThe Features Of Other Types Of Islamic Financing Qardhul Hasan Rahnu financingThe Features of Securities For Investment Islamic Repos (sale and buy back agreements) Islamic Negotiable Instruments of Debt Certificate Islamic Acceptance Bills Government Investment Issues Bank Negara Negotiable Notes
The Features Of Other Types Of Islamic FinancingQardhul HasanRahnu financing
1. QARDUL HASANRefers to an interest free loan.The borrower is only required to repaythe principal amount borrowedMay pay an extra amount at his absolutediscretion, as a token of appreciationIslamic banks lend qardh well, alsoprovide loans in the form Qardul Hasan
In General, The Use Of Funds In Islamic Banking Qardul Hasan,For Venture Capital (Funding)Qardul Hasan channel funds through the EconomicEmpowerment program as a social concern existsshariah banking to the community and aims to helppeople who need help to grow our businesses better.To Finance School (Contribution)The higher expenses of education funding haveresulted in a society that does not go to school.Therefore, Islamic banking trough contract QardulHasan help those who feel a lack of funds forschool fees or education.
2. AR-RAHNUMortgage or collateral, is defined in the Islamicjurisprudence as ‘possesions offered as security for a debtso that the debt will be taken from it in case the debtorfailed to pay back the due money”Ar–Rahn is a permissible contract in Shari’ah.Ar-rahnu is sources of funding for those who need loanwith immediate effect for a period of time.The scheme is very approriate, as it provides the financialproduct to the small businesses that may sometimes havedifficulty getting a loan facility from the conventionalfinancial system.
1.ISLAMIC REPOS (SALE AND BUY BACK AGREEMENTS)“islamic securities” refer to securitiesissued based on Islamic principles asapproved by BNM or SC (securitiescomission)SBBA is an Islamic financial instrumentintroduced for the purpose of enhancingliquidity in the Islamic InterbankMoneyMarket(IIMM) and providing additionalavenue for the IIMM participants to sourcetheir funding requirements.
SBBA is an Islamic repurchase agreement (Repo-i) transaction where by a party(SBBA Seller) sellIslamic securuties at an agreed price to theother party.(SBBA Buyer) and subsequently the SBBA buyerand SBBA seller enter into another agreementthereon whereby the former promises to selland the letter to buy back the securities on aspecified future date and at an agreed price“SBBA seller” refer to the party who initiates tosell Islamic securities for cash consideration“SBBA buyer” refers to the party or investor whopurchases the Islamic securities and pays cash.
2.ISLAMIC NEGOTIABLE INSTRUMENTS OF DEBT CERTIFICATE(NIDC)It is offered under the Shariah contract ofBBA(deferred pay. sale) which is the sale ofgoods on a deferred payment basisThe refers to a method of sale with deferredpayment basis at a price which includes aprofit margin agreed by both the Bank andthe customerThe underlying sale is facilitated with anidentifiable asset owned by Bank Islam
3. ISLAMIC ACCEPTANCE BILL(IAB)Was introduced in 1991.The objective to encourage and promote bothdomestic and foreign trade through an Islamicfinancing mechanism.The Shariah concepts of murabahah (cost-profit) and bai’ dayn (debt trading)2types of financing under the AB-I facility :--Imports and local purchases-Exports and local sales
Import & local purchasesAn applicable mechanism under this type offinancing is the working capital financingunder murabahahThe bank appoints the customer as thepurchasing agent for the bankThe customer is allowed a defered paymentIf the bank decides to sell the SB-i to a thirdparty, AB-i will be sold under the concept ofbai’ dayn
Export & local salesThe applicable Shariah concept under thistype of financing facility is bai’ daynThe customer prepares the sale documentsas required under the sales contract or letterof creditThe bank will purchase the AB-i at thematually agreed price using the concept ofbai’ dayn and the processs will be credited tothe customer’s account
4. GOVERNMENT INVESTMENT ISSUESIt is long term non-interest bearing securitiesissued by the Government of Malaysia based onIslamic principlesIt is a Domestic Ringgit Islamic Bond structuredon the concept of Bai Al-Inah and can be tradedin the secondary marketThrough this sale and purchase transaction . Adebt has been created.This debts is thensecuritized through the issuance of GIIGII is assigned with no credit risk as it is issued bythe government
5)BANK NEGARA NEGOTIABLE NOTE-IA short-term instrument issued by the Central BankStructured based on the concept of Bai Al-Inah andcan be traded in the Islamic Money Market (IMM)secondary market based on the concept of Bai Al-DaynA monetary policy instrumentTraded on a discounted basis and pay able at facevalue on maturityTenure up to 6monthHigh liquidity in secondary marketNo credit risk