Istisna

Istisna

In Islamic law, a contract in which a buyer purchases an item for deferred delivery. The item must be described in detail and construction must fit the specifications. There is no set delivery date for the item. Usually, an istisna contract is made for specially made items. For example, one may make a contract to build a custom table for a client. Payment may be made in a lump sum or in installments.
References in periodicals archive ?
Among those are Ijarah, or Islamic lease agreements; Murabahah, or sale and resale contracts; Istisna, a contract of exchange with deferred delivery; Musharakah, or risk partnership; and Mudarabah, a contractual arrangement under Islamic law between two partners for profit sharing whereby one provides capital and the other provides entrepreneurial or management skills.
In Forward Ijarah, the property is acquired by Alizz Islamic Bank under the Istisna sale contract with a developer upon the customer's promise to lease.
For example, in construction or heavy machinery projects, banks use Istisna (order to manufacture model) (Ullah & Al-Karaghouli, 2017).
Kamali (2000) states that Istisna is a sale and purchase agreement whereby the seller undertakes to manufacture or construct according to the specifications given in the agreement.
In 2015, a central bank committee recommended opening a specialised interest-free window to offer cost-plus financing, deferred payment and deferred delivery contracts, a reference to common sharia-compliant contracts such as murabaha and istisna.
Sukuk structures may be based on various forms of Shari'a compliant transactions, such as Ijara, Istisna, Musaraka, Mudharaba and Murabaha.
2 percent collective contribution by Murabaha and Diminishing Musharaka in overall financing of IBI, percent share of both in overall financing declined during CY15 due to relatively higher growth in financing modes like Musharaka, Salam and Istisna.
The deal is a landmark transaction for Mohebi Logistics as it represents their debut financing in the capital markets and is the first Sukuk issue based on an Istisna / Ijara structure.
Because of its emphasis on asset-backed financing and thus connectivity to the real economy, the IMF/World Bank in a study published in May this year also considered Islamic modes of financing, especially Sukuk (equivalent to Islamic bonds) and Istisna (forward sale construction and project finance), as ideal for financing infrastructure and development.
Within these two risk extremes, Ijara and Istisna contracts are included based on collateral securities.
The solution enables banks to define financing products under the concepts of Murabaha, Tawarruq, Musharaka, Ijarah, Istisna, Salam, Qard Hassan, etc.