Trade Based Financing

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Murabahah

It is a contract of sale between a customer and a bank in which a bank purchases the goods needed by a customer and sells the goods to the customer on a cost-plus markup basis. The profit (mark-up), Expenses and the time of payment including the schedule are specified in an initial contract. The bank will own the goods before it sells it to the customer. The bank requires collateral from the customers to secure finance

The following are some of the list of services included in Murabahah financing

  • Murabahah Financing- For purchase of inputs, machinery, finished goods and project financing
  • Murabahah Revolving Financing Facility-renewable facility for the purchase of inputs
  • Murabahah Import Financing-For purchase of inputs and machinery from abroad
  • Murabahah Pre-shipment Financing-For the purchase of goods to be exported

Financing Features

  • The bank purchases and sells different goods upon the request from the applicant
  • Availed to meet working capital requirements of a business in terms of inputs, semi-finished goods and finished goods
  • Repayments are made monthly, quarterly, semi-annually or at lump-sum repayments depending upon the cash flow pattern of the business

Entitlement

  • Legal Persons (individual & companies)

Salam

This is a financing service of sale where the price paid in full at the contract’s execution and delivery is deferred to a future date. This is a product for working capital purposes to customers engaged in the agricultural sector as per the contract between the Bank and the Customer. It is a sales arrangement whereby the customer shall deliver the type of product she/he produces in accordance with the type, quality, quantity, and given period to the bank. The bank requires collateral from the customers to secure finance

Istisna

It is financing is a contract for the acquisition of goods manufactured on order whereby the bank places an order to a manufacturer or a contractor to manufacture, assemble or construct, a specific commodity for a purchaser. The agreed price will be set on the initial contracts