Long Term Financing Solutions

A strong SME sector plays a vital role in economic growth of the country. Bank Alfalah Islamic caters its SME Customers in the long term financing for Infrastructure Development and Industrial Projects. Two major Shari’ah Compliant modes used for long term financing are:

a. Alfalah Ijarah

Catering the needs for medium to long term asset financing, project financing, plant & machinery etc., Bank Alfalah offers Shari’ah Compliant finance facility ‘Ijarah’ to SMEs. Technically the term Ijarah means to rent out something. In the context of Islamic banking, an Ijarah contract can be understood as an arrangement/contract whereby one party (Lessor) agrees to transfer the benefit of use of an asset to another party (Lessee) for an agreed period at an agreed consideration.

b. Alfalah Diminishing Musharakah

Diminishing Musharakah is an Islamic medium to long term finance facility which caters for Customers in need to finance fixed and movable assets (E.g. land, factory, and building), long term projects, etc. The concept of Diminishing Musharakah allows Bank and Customer to participate in joint ownership of a Shari’ah compliant asset. The Bank’s share is divided into units which are purchased by the Customer periodically thus increasing his/her (Customer) share in the partnership until the ownership is fully with the Customer. Meanwhile the Bank charges rent on the portion of asset owned by it (Bank).