To meet the need of small farmers who need money to grow their crops and to feed their family up to the time of harvest. When Allah declared Riba haram, the farmers could not take usurious loans. Therefore Holy Prophet allowed them to sell their agricultural products in advance.
To meet the need of traders for import and export business. Under Salam, it is allowed for them that they sell the goods in advance so that after receiving their cash price, they can easily undertake the aforesaid business. Salam is beneficial to the seller because he received the price in advance and it was beneficial to the buyer also because normally the price in Salam is lower than the price in spot sales and the difference in the two prices is a valid profit for the Bank.
- Under Bai Salam agreement (forward purchase) funding support will be provided directly to the farmers/grower (group/individual) against supply of agreed quantity of the produce on maturity. The deal will be adjusted on delivery of the contracted produce by the farmer at maturity. Bank may take services from 3rd party (individual/NGO/Association) for monitoring & control in the form of agent/partnership. The client may secure the Bank investment in the form of Personal Guarantee, Third Party Guarantee, Equitable Mortgage or in other ways as acceptable to the bank & Sharia.
- Under a parallel Bai Salam / Istisna agreement (forward sale) bank will sell full or part of the goods of the 1st agreement at a price ensuring bank’s profit at a future maturity date. The purchaser shall deposit an advance payment against his purchase agreement. The deal will be adjusted on maturity by delivery of the goods by the Bank (or its agent) and deposit of balance payment by the client.
- Under Istisna Construction Investment bank will finance for construction/rental of Godown for storage of the produce (in case food grains). The construction will provide storage facility on rental basis and bank investment will be adjusted from the rental income. The bank exposure may be secured by the mortgage of the landed property and personal guarantee of the owner or any other way acceptable to the Bank.
Any Bangladeshi citizen (of age 20 years & above) or Sole proprietorship/Partnership/Private Limited Company/NGO/Association.
For Bai Salam investment limit to single client:
- Tk.200,000/- (maximum) without collateral and against personal guarantee, 3rd party guarantee, hypothecation & equitable mortgage. (As applicable on case to case basis)
- Tk.25,00,000/- (maximum) with collateral acceptable to the bank.