Istisna’a is ideally suited for exporters and manufacturers who have export orders in the shape of Sight/Usance Letter of Credit/ Sight Export Contract (D/P)/ Usance Export Contract (D/A).

It is a special kind of sale transaction where manufactured goods are transacted before it (the good) comes into existence. It is an agreement of sale at an agreed price whereby the purchaser places an order with agreed price for manufacturing/ construction and assembling anything to be delivered at a future date. Istisna’a can be used to cater to the working capital requirements of a business involved in the manufacturing of goods as well as for long term projects.

The Client will seek finance to make the export goods ready mainly meeting up cost such as utility bills, salary, wages etc. The bank will place order to the customer to make some export items at a fixed cost. The client will be appointed as Bank’s sales agent. Then the client will export the products to their importer along with their products. After receiving the export proceeds, the bank will gain from the difference of selling and buying price.

Salient Features

• Underlying Shariah contract is Istisna’a.
• Short term working capital facility.
• It is an alternative to conventional Packing Credit.
• To procure products / goods which will be exported providing pre-shipment working capital facility.
• It facilitates the manufacturer sometimes to get the price of the goods in advance, which they may use as capital for producing the goods.
• It gives the buyer opportunity to pay the price in some future dates or by installments.
• It is a binding contract and no party is allowed to cancel the Istisna’a contract after the price is paid and received in full or in part or the manufacturer starts the work.