Islamic Products

Definition of Murabaha:

It is the most common Islamic financing operation currently, and Murabaha involves purchasing a specific asset by the bank based on the customer's request and then selling it to the customer at a price that includes its original price and an agreed profit margin.

How Murabaha Works:

Murabaha financing differs radically from traditional financing methods, as it involves financing physical assets. The bank participates in ownership risks.

Mechanism:

Instead of simply providing financing to the customer, the bank itself purchases goods from a third party based on the customer's request. The bank then sells those goods to the customer for an agreed price through a deferred payment program, usually in the form of installments.

Advantages:

• Fully compliant with Islamic Sharia provisions
• The bank bears ownership risks
• Flexibility in payment programs
• Financing real physical assets

For More Details:

Please contact the nearest bank branch or call the customer service center at 6566 for free consultation.

Definition of Ijarah:

According to the provisions of the Ijarah transaction, the Islamic Banking Department at the Iraqi Islamic Bank for Investment and Development purchases an asset from the seller and then leases it to the customer (or lessee) for an agreed period of time in exchange for a predetermined rent.

Mechanism:

During this predetermined period, the ownership title of the underlying assets remains with the bank while the actual possession of the asset is with the lessee. During the life of the commodity, the ownership risk remains with the bank, while the lessee is responsible for misuse of that asset.

Advantages:

• The bank retains the ownership title
• The customer gets actual possession
• Ownership risk is on the bank
• Fixed and predetermined rent
• Compliant with Islamic Sharia provisions

Uses:

• Financing equipment and machinery
• Financing commercial and residential real estate
• Financing transportation means
• Financing productive assets

For More Details:

Please contact the nearest bank branch or call the customer service center at 6566 for free consultation.

Definition of Istisna:

Istisna is a contract for purchasing goods according to agreed specifications, where payment is made at the time of contracting or gradually according to the degree of progress or completion of work.

Mechanism:

Islamic financial institutions usually use this type of contract as an agreement with the customer to finance their various needs for industries and urban construction. We at the Iraqi Islamic Bank for Investment and Development undertake to pay the real estate developer in full or according to the completion of certain stages of work. The customer then pays the bank in installments according to their ability to pay.

Advantages:

• Financing projects according to required specifications
• Gradual payment according to completion stages
• Flexibility in repayment
• Compliant with Islamic Sharia provisions
• Suitable for construction and industrial projects

Uses:

• Financing real estate projects
• Financing industrial projects
• Financing urban construction
• Financing projects according to special specifications

For More Details:

Please contact the nearest bank branch or call the customer service center at 6566 for free consultation.

Definition of Takaful:

Takaful is an Islamic insurance concept based on Islamic banking transactions, observing the rules and regulations of Islamic Sharia. This concept has been practiced in various forms for more than 1400 years.

Takaful Principles:

• Policyholders cooperate among themselves for the common good
• Each policyholder pays their contribution to help those in need
• Losses are divided and responsibilities are spread according to the community pooling system
• Uncertainty regarding underwriting and compensation is eliminated
• No gaining advantage at the expense of others

How Takaful Works:

Theoretically, Takaful is considered cooperative insurance where members contribute a certain amount of money to a common fund. The purpose of this system is not merely profit but adhering to the principle of "you bear responsibility for others".

Difference from Commercial Insurance:

Commercial insurance is strictly not allowed for Muslims because it contains the following elements:

• Gharar (uncertainty)
• Maysir (gambling)
• Riba (interest)

Takaful Models:

There are three (3) models and numerous variations on how to implement Takaful:

• Mudarabah model
• Wakalah model
• A combination of both

For More Details:

Please contact the nearest bank branch or call the customer service center at 6566 for free consultation.