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Bai Istisna (Pre-Shipment Investment):
 
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Istisna' is generally a long-term contract whereby a party undertakes to manufacture, build or construct assets, with an obligation from the manufacturer or producer to deliver them to the customer upon completion. In practice, the key advantage of an istisna’ contract is that it can provide flexibility to the customer, where payments can be made in installments linked to project completion, at delivery or after project completion.

In contrast to istisna', for salam contract the payment has to be made in full, in advance.

Istisna' involves: the customer (the buyer); the Islamic bank (the seller); and the manufacturer (in some cases it can also involve sub-contractors), where the buyer can obtain financing from the Islamic bank.

 
 
    istisna    
  Pre Shipment Investment:  
 
 

Pre Shipment investment is a short term working capital finance specially provided to an exporter against the documentary evidence of having entered into export commitment. Pre Shipment Finance is granted at the stage prior to the shipment of goods and such finance is given to procure raw material, for paying manufacturing and packing charges and payment of insurance premium and freight. As and when the goods are shipped and shipping documents are obtained the pre shipment finance is to be liquidated against the proceeds of export documents tendered.

Union bank Ltd grant pre shipment finance against documentary evidence either by way of an export letter of credit or a contract. Letter of Credit constitutes the most frequently used instrument for export of goods from Bangladesh. Readymade garments, which comprise a large chunk of Bangladesh’s export, are invariably exported against L/C because the underlying L/C constitutes the basis for opening Back to Back L/C (both local and foreign) for procuring fabric and accessories.

 
 
  Key Features:      
 
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Istisna'a is an exceptional mode of investment allowed by Islamic Shariah in which product(s) can be sold without having the same in existence. If the product(s) are ready for sale, Istisna'a is not allowed in Shariah. Then the sale may be done either in Bai-Murabaha or Bai-Muajjal mode of investment. In this mode, deliveries of goods are deferred and payment of price may also be deferred.
   
         
 
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It facilitates the manufacturer sometimes to get the price of the goods in advance, which he may use as capital for producing the goods
   
         
 
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It gives the buyer opportunity to pay the price in some future dates or by installments
   
         
 
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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
   
 
   
 
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Istisna'a is specially practiced in Manufacturing and Industrial sectors. However, it can be practiced in agricultural and constructions sectors also
   
       
  Diference between Istisna’a and Bai-Salam:    
 
Bai-Istisna’a Bai-Salam
1 The subject of istisna’a is always a thing which needs manufacturing. 1 Bai-Salam can be effected on anything, no matter whether it needs manufaturing or not.
2 It is not necessary in Istisna’a that the price is paid in full in advance. 2 It is necessary in Bai-Salam that the price is paid in full in advance.
3 The contract of Istisna’a can be cancelled before the manufacturer starts the work. 3 The contract of Bai-Salam, once effected, can not be cancelled unilaterally.
4 It is not necessary in Istisna’a that the time of delivery is fixed. 4 The time of delivery is an essential part of the sale in Bai-Salam.
   
 
     
 
Profit rates of Investment products:
   

 

 

 

 

 

 

 
  
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