FAQs

Islamic Finance refers to a system of Finance or finance activity system consistent with Islamic law (Shari’ah) principles and guided by the Islamic financial system. In layman’s language, Financing has been subjected to shari’ah ruling.

Shariah is Islamic law that governs religious rituals and aspects of day-to-day life in Islam. Shariah, literally translated, means “the plain way. “There is extreme variation in how Sharia is interpreted and implemented among and within Muslim societies today. This is mainly so in financial laws.

Cost plus margin/profit financing. Also known as Murabaha to the Purchase Orderer.

The Murabaha financing mode is used extensively to facilitate the trade finance activities of Jisr Capitals. “Trade finance” (Murabaha-muajjal) involves Jisr Capital purchasing goods upon the Customer’s demand and then selling them on to the Customer at an agreed profit. 

It results in a debt instrument covering the Capital’s cost plus the Capital’s profit margin; this amount representing the Capital’s sale price to the Customer is paid to the Capital by the Customer in installments.

1. The buyer must identify goods.
2.  Jisr Capital must buy, own, and sell to the client.
3. Take ownership of the goods before selling.
4. The possession can either be constructive or physical.
5. Transfer of ownership to the client.
6. Payment of the agreed buying price over the agreed period.
7. Price, once agreed, cannot be changed.

1. Mudarabah: Profit-and-Loss-Sharing (PLS) mode of Financing and takes the form of a partnership contract involving two parties: 

   The Jisr Capital provides the Capital for a business, while the Customer provides labor and entrepreneurial skills to manage the business; any loss is borne solely by the Jisr Capital or the financier while the parties share the profit according to a pre-agreed arrangement made between them. 

Musharakah: equity or venture capital financing; this is another mode of PLS arrangement, except that the Customer puts up part of the equity with the Jisr Capital into a business as a joint venture. The Jisr Capital or financial institution and the Customer provide Financing for a specified project in agreed proportions and have a pre-arranged agreement in the sharing of profit. Any loss will have to be shared according to the respective ratio of their investments.

a partnership where the Capital leases its share to the Customer, and the Customer pays rentals to the Capital as per the agreed time. Through an ujrah agreement, the customer/partner pays profits to inform of rentals to the Capital. Hence the Capital makes a return from the rental payments. The Customer then purchases the Jisr Capital’s share in a project through periodic payments to the Capital. Diminishing Musharakah is used by Jisr Capitals, especially for housing finance and financing the purchase of other fixed property/assets.