Import business is operated under Bai-Murabaha mode of investment. In this case, the importer provides an irrevocable letter of authority to the bank to import specific goods on behalf of him (the client) from the foreign seller and promises to buy the same from the Bank. In this case, the Bank is designated as a consignee in the Bill of lading and later on the Bank hands over the same to the importer through endorsement i.e. the ownership of the goods is transferred to the importer. As per uniform customs and practices, the seller lodges his claim or places claim for dues to the buyer’s Bank through the bill of exchange and the buyer’s bank discharges the claim on behalf of the buyer. The above import system is fully approved/ supported by the Islamic Shari’ah.

Letter of Credit:

A letter of credit or LC is a written document issued by the importer’s bank (issuing bank) on behalf importer. Through its issuance, the exporter is assured that the issuing bank will make a payment to the exporter, by the presentation of complied documents for the international trade.

First line:

• Underlying Shari’ah contract is Wakalah (Surety ship)
• Non-funded facility
• LC is retired through either:
    o Murabaha Post Import (MPI) or any other available mode of financing (by making payment),
    o Acceptance for usance LC (by creating Acceptance liability),
    o Cash payment from customer.

Murabaha Post Import (MPI):

The importers apply for investment facility against imported goods after shipment for payment of the invoice values of the goods to the seller/supplier including custom duty, VAT and other expenses. In such a case, Islami branches allow a Bai-Murabaha investment facility under single deal concept. Bills and the handling of Post-shipment are settled under one agreement while opening the letter of credit for importing the goods.

Import under diminishing proprietorship method HPSM (Hire Purchase under Shirkatul Melk):

Capital machineries and other re-usable goods are imported under this mode. It combines three modes: rent (Ijara), partnership (Shirkat) and buying and selling. The Bank and the client invest their capital jointly through a contract called partnership (Shirkat). The bank leases its portion at a certain rent. The Bank sells its portion to the client on receipt of the price under this system.