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Glossary  
Definition of Major Islamic Finance Instruments
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Bai Ajil bi Ajil = delayed-for-immediate sale

The sale price is paid immediately and delivery of the sale item is delayed. Synonymous with Bai al Salam.

Bai al Arboon = deposit-secured sale

A sale agreement in which a security deposit is provided in advance as part payment towards the price of the commodity. The deposit is forfeited if the buyer does not meet his obligation.

Bai al Inah = sale and buy-back

The sale and buy-back of an asset for a higher price than that for which the seller originally sold it. A seller immediately buys back the asset he has sold on a deferred payment basis at a price higher than the original price. This can be seen as a loan in the form of a sale.

Bai al kali’ bi al kali’ = sale of debt for a debt

Prohibited sale, the most well known of which is where a lender extends his debtor’s debt repayment period in return for an increase on the principal, that is, interest.

Bai al Salam = future delivery

A contract whereby the payment is made in cash at the point of contract but the delivery of asset purchased will be deferred to a predetermined date.

Bai Bithaman Ajil = deferred payment sale
Alternative spelling = Bai Muajjal

The sale of goods on a deferred payment basis. Equipment or goods requested by the client are bought by the bank, which subsequently sells the goods to the client for an agreed price, including a mark-up (profit) for the bank. The client may pay by installments within a pre-agreed period, or in a lump sum. This sale works in a similar way to a Murabahah contract, but with deferred payment.

Bai Dayn = debt financing

The provision of financial resources required for production, commerce and services through the sale and purchase of trade documents and papers. Bai Dayn is a short-term facility with a year or less maturity. Only documents evidencing debts arising from bona fide commercial transactions can be traded.

Bai Istijrar = supply sale

When a supplier agrees to deliver to a client on a regular basis at an agreed price and mode of payment.

Bai Muajjal = deferred payment sale
Alternative spelling = Bai Bithaman Ajil

The sale of goods on a deferred payment basis. Equipment or goods requested by the client are bought by the bank, which subsequently sells the goods to the client for an agreed price, including a mark-up (profit) for the bank. The client may pay by installments within a pre-agreed period, or in a lump sum. This sale works in a similar way to a Murabahah contract, but with deferred payment.

Bai Muzayadah = open bidding trading

The principle governing open auctions, where the asset is awarded to the highest bidder.

Bai Wafa = sale and buy-back

The sale and buy-back of an asset within a set time, when the original buyer agrees to the original seller's repurchase.

Baitul Mal = treasury

Batil = null and void

 

 
Latest Issue
Wednesday 25th February 2015
Volume 12 Issue 08
   
Cover Story
IFN Rapid
News Briefs
Asset Management
Takaful
Ratings
Moves
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  IFN Global Trendswatch
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  IILM expands short-term Sukuk program
  IFN Weekly Poll: Would the upcoming Sukuk offering in Labuan by Australian joint venture company, SGI-Mitabu spur more Islamic finance activities back home in Australia?
IFN Country Correspondent
  Law reforms on the horizon
IFN Sector Correspondent
  Solid start to 2015 for Islamic syndicated finance
IFN Country Analysis
  France — a stronger Islamic finance presence in 2015?
IFN Sector Analysis
  Risk management: A continuous endeavour
Features
The search for an Islamic risk-free rate
Case Study
An exchangeable Sukuk with a hybrid structure: Cahaya Capital

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