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Diminishing Musharakah Finance (DMF)
In DMF, Bank participates in the form of equity jointly with the client for purchase of an asset as per agreement, lease out the asset to the client against rent and client gradually pays back the bank within stipulated time as per agreement.
Synthesis of three contracts
- Purchase under joint ownership
- ijarah or leasing
- Waad Bil Buy; which means promise to purchase the proportionate share of the asset of the bank by the client
- Sale and transfer of ownership to the Client.
In Short
- This is a product under the Shariah contract of Shirkat and Ijarah.
- To procure or to construct the asset jointly by the bank and the client under Musharakah Contract.
- The client will give a promise to the bank to purchase the bank’s proportionate share of undivided Musharaka asset at an agreed price.
- Usually long term nature.
- Financing for any types of non-fungible (fixed type) asset(s) which is/are Shariah Compliant.
Salient Features
- This is a mode of finance used for long term/project finance requirement of the client.
- The exact ownership of both the bank and Client must be recognized.
- The ownership is usually transferred to client after the rental period.
- Client has to pay a fixed rental throughout the rental period with principal amount.
- At the end of financing period, Client will be the sole owner of the asset subject to paying the full price of the bank’s asset.
- Takaful Insurance /Maintenance cost will be borne by the bank and the client jointly in proportion to their ownership in the Musharakah Asset.
Following products are available under DMF
Segments |
Products |
Corporate |
DMF-Civil construction, DMF –Machinery, DMF-Vehicle, DMF -Machinery against TD, etc. |
SME |
DMF- Machinery, DMF-Civil construction, DMF-Vehicle DMF against Machinery TD, DMF-Machinery TSD, DMF Fleet Financing, DMF Asha DMF Mukti, DMF Uthkorsho, DMF Uddipon, DMF Business solution, etc. |
Retail |
DMF-Auto Finance, DMF Executive Finance, DMF Assure Finance, DMF Women's Finance, DMF Two Wheeler Finance, DMF Home Finance, DMF Home Finance (Constriction & Renovation) , DMF Fast Finance, etc. |