Istisna
Istisna is a Sharia mode of financing widely used by Islamic banks and financial institutions to finance the construction of buildings, residential towers, villas and related products, and manufacturing of aircrafts, ships, machines and equipment, etc.
The Arabic word "Istisna" means "asking someone to manufacture". It may be further defined and elaborated as a sale contract between the seller and the buyer for the sale of an asset described in the sale contract and transacted before it comes into existence. To fulfil its obligation, the seller can either manufacture/construct it by itself or can get it manufactured/constructed by someone else to deliver it to the buyer on the date described in the sale contract. The buyer can pay the sale price in lumpsum at the time of signing the contract or later in different stages as the manufacturing/construction process proceeds.
We adopt Istisna mode of financing to fulfil your financing requirements in relation to properties, buildings, and villas, etc. Following is a brief outline of this mechanism. If you own, or have a usufruct of, a plot of land and want to construct a property on it and need financing for this purpose, we will sign an Istisna agreement with you to sell the property and then construct the building as per your specifications at our own cost and will get the sale price from you on a deferred payment basis.
Details of the terms under which this product is offered are outlined below:
Terms of Financing
Down Payment : Minimum 25% of total construction cost*
Transaction Period : Up to 10 years
Mode of Payment : Quarterly, Semi-annual or Annual terms are available
Source of Payment : Business cash flows, rentals
Profit Rate : Fixed throughout the financing period
Security : First class mortgage on the plot & building, post dated cheques covering installments
Insurance : Insurance policy covering the property under construction to be assigned to the Bank
Qualified Assets : Residential, Office Buildings & Villa Complexes
Documentary Requirements
Primary documents comprise:
Individuals
1. Copy of valid passport
2. Completed finance application form
3. Copy of site plan
4. Copy of title deed
5. Feasibility study by project consultant
6. Construction/Engineering plans
Companies
1. Copy of valid Trade License
2. Copy of Commercial Registry
3. Copy of Partnership agreement (in case of partnerships)
4. Copy of Chamber of Commerce and Industry
5. Copy of valid passport of partners (in case of partnerships)
6. Copy of valid passport of authorized personnel and copy of Articles of Association defining their powers
7. Copy of site plan
8. Copy of title deed
9. Feasibility study by project consultant
10. Last 3 years’ financials
11. Construction/Engineering plans
*Requirement may be lowered if additional security is provided.