Principles and Practices of Investment Modes of Islamic Banking| | Abstract: The objective of the study is to gather practical knowledge regarding general banking system, investment and foreign exchange system and its operation. By pictorial description it is tried to find out the variation from various departments, particularly investment. Other objectives of the report are to identify the various types of existing services rendered by the SIBL. understand the prevailing mechanism of modes of finance of SIBL. Study the performance of modes of finance of SIBL.
Highlight the major characteristics of modes of finance of SIBL. Understand the basic difference in relation to conventional bank. 1. 1 Introduction: Today’s world is changing very rapidly as new business are emerging by placing the old ones. Towards the end of century, let alone a millennium, people feel a growing uneasiness about the future. Many countries suffer from chronic high employment, a persistent deficit and deteriorating purchasing power. Like the other business, banking practices are also changing at an incredible pace.
Every decade calls upon company management to think freshly about its objectives, strategies and tactics. In the banking industry, community branch banks have long been the marketing channels through which customers deposit money and make payments. Banking plays an important role in the economy of any country. In Bangladesh Muslim consist more than 80% of its population. These people possess strong faith on Allah and they want to lead their lives as per the construction given in the holy Quran and the way shown by the prophet Hazrat Mohammad (Sm).
But on Islamic banking system was developed here up to 1983. The traditional banking is fully based on interest it is commonly meant as commercial banks. But interest is absolutely prohibited by Islam. The main aim of traditional banking is to earn profit by borrowing and lending money in exchange of interest. As a result there is an unfair competition among the bankers and among the customers. Under conventional framework a bank borrows to lend and it mobilizes savings/ deposits by borrowing from savers and lends those deposits to productive interest on deposits and advances respectively.
The banks generally maintain a difference is known as interest-spread which is the main income of an interest-based bank. In the Islamic banking system the bank receives no interest. In this case Islamic bank receives its entire deposits from the investment of the clients on the basis of profit-sharing. So, it is clear that in case of the traditional banking systems, a fixed percentage of interest, irrespective of income earned is paid to the depositors. The depositors of Islamic bank are never deprived of excess income, which the bank may make at the end of year.
Not only has this traditional bank given fixed interest rate even when they incur operational loss. The critics of Islamic banking system are of the opinion that both are found same in terms of deposits mobilization and advances investment. Social Investment Bank Limited holds the leading position in Islamic sector banking arena of Bangladesh. SIBL became operational on 22nd November 1995 with a clear manifesto to demonstrate the operational meanings of participatory economy, banking and financial activities as an integrated part of an Islamic code of life.
It is an alternative concept of Islamic Banking with a unique human face approach to credit and banking based on interest free economics and financial transactions and income generating program for the millions of the urban and rural poor and a profitable investment options for the rich to invest, earn and live in a better society with greater security and peace at the operational level. SIBL is operating three sector banking such as Formal, Non formal and voluntary sector.
SIBL is beginning a new era of Islamic banking having social, ethical and moral dimension in each of its activities ranging from credit to constructions, trading to transport, farming to fishing, manufacturing to mining and so on. 1. 2 Objectives of the study: The objective of the study is to gather practical knowledge regarding general banking system, investment and foreign exchange system and its operation. In this report, I emphasize more on investment. By pictorial description it is tried to find out the variation from various departments, particularly investment.
Other objectives of the report are as follows: v To identify the various types of existing services rendered by the SIBL. v To understand the prevailing mechanism of modes of finance of SIBL. v To study the performance of modes of finance of SIBL. v To highlight the major characteristics of modes of finance of SIBL. v To understand the basic difference in relation to conventional bank. 1. 3 Methodology of the study: The present study is based on empirical as well as theoretical analysis.
Collected data and information were processed and analyzed critically in order to make the program more informative, fruitful & purposeful. In preparing this report I have collected data and information from the following sources: (A) Primary Sources: O Daily dairy maintained by me O Observation in the branch’s operation. O File study O Exposure on different desk of the bank; (B) Secondary Sources: O Manual of SIBL O Training handout O Annual report of SIBL O Web-site: www. siblbd. com 1. 4 Scope of the study:
Social Investment Bank limited is one of the Islamic banks in Bangladesh. Banking system occupies an important place in a notion’s economy. A banking institution is indispensable in a modern society. It plays a vital role in the economic development of a country and forms the core of the money market in an advanced country. SIBL is an unconditional specialized financial institution that performs most of the standard banking services and investment activities on the basis of profit and loss sharing system confirming to the principles of Islamic Shariah.
This report covers the Organizational structure, background, functions and the mode of investment of the bank. But mode of finance is much talked in the financial literature of economic development. This topic also includes a vast area of financial literature. But this present study covers only the modes of finance of Islamic bank, specially the modes & mechanism of finance of Social Investment Bank Limited. This study is confined to only this bank other than conventional bank. 1. 5 Limitation of the study: Internship is a very important part of BBA course.
It gives the students to achieve the practical knowledge of business. So, it is easy to say that the importance of internship is knows no bounds. But while the internship program is going on I face some problems. The limitations of such activities are given below: v I was allowed only twelve weeks to complete this study. Such a short period of time is insufficient to scrutinize the activities of all departments of a banking company like SIBL. v Every man of the branch was so busy that they were not able to provide sufficient care to make the internee’s clear in each and every step. Secondary data was not available for supporting the report. 2. 1 Definition of “Islamic Banking”: Islamic banking represents a radical departure from traditional banking. Islamic banking has to derive its inspiration from the religious edits of Islam and has to mould its operation within the framework of the teaching of Islam. The general secretariat of OIC defines an Islamic bank as “a financial institution whose statues, rules and procedures expressly state its commitment to the principles of Islamic Shariah and to the banning of the receipt and payment of interest on any of its operation”.
According to Islamic Banking Act 1983 of Malaysia, Islamic bank is “A company which carries on Islamic banking business, Islamic banking business means banking business whose aims and operations do not involve any element which is not approved by the religion Islam”. 2. 2 Quranic Verses on Interest: Those who swallow Riba(usury) cannot rise up same as he ariseth whom the devil hath prostrated by (his) touch. That is because they say: Trade is just like usury: whereas, Allah permitted trading and forbideth usury: He unto whom and admonition from his Lord cometh and (he) refraineth (in obedience thereto).
He shall keep (the profits of) that which is past. And his affair hence-forth is with Allah. As for him who returneth (to Riba) such are rightful owners of fire. They will abide therein. “O,Ye who believe, observe duty to Allah, and give up what remaineth(due to you) from usury, if ye are (in truth) believers. And if you don’t, then be warned of war (against you) from Allah and His messenger. And if you repent then you have your principal (without riba). Wrong not, and you shall not be wronged”. 2. 3 Hadith on Interest: Abdullah Ibn.
Masud (Allah be pleased with him) said that: Allah’s Messenger (may peace be upon him) cursed the one who accepted interest and the one who paid it. Jabir bin Abdullah said that: Allah’s Messenger (may peace be upon him) cursed the acceptor of interest and its payer, and the one who records it, and the two witness, and he said: They are all equal. 2. 4 History of Islamic Banking: We can divide history of Islamic banking into three categories: v Philosophical Foundation (1930-1960) v Institutional Development (1962-1975) v Pioneer Banks (1975-1989) Philosophical Foundation (1930-1960) Publication of Islamic economic and banking. v Many Muslims countries have got independence. v Opportunity to establish own ideology and culture. Institutional Development(1962-1975) Institution | Development year| Savings corporation, Malaysia| 1962| Mit Ghamr savings bank, Egypt| 1963| Nasser social bank, Egypt| 1971| Work of IDB started at Jeddah| 1975| Pioneer banks (1975-1989) During the year of (1975-1989) the following pioneer bank established: v Kuwait finance house v Jordan Islami bank v Islami investment & exchange corporation v Dubai Islami bank v Islamic finance house Al-Rajhi banking investment corporation 2. 5 Bangladesh Bank License for Islamic Banking Operation: The following license provided by Bangladesh bank – “The bank will operate within the framework of the existing banking laws, rules and regulation subject to such minor adjustment that may be considered for an Islamic bank to function. In addition to the above all requirements of banking companies ordinance 1962 (as adapted in Bangladesh) as also the relevant provisions of Bangladesh Bank order, 1972 (P. O. no. 127 of 1972) and instructions issued from time to time there under Bangladesh Bank will also apply to the bank”.
Islami Banks in Bangladesh: Name of the Banks| Establishment year| Islami Bank Bangladesh Ltd. | 1983| The Oriental Bank Ltd. | 1987| Al-Arafah Islami Bank Ltd. | 1995| Social Investment Bank Ltd. | 1995| Shahjalal Islami Bank Ltd. | 2001| Export Import (EXIM) Bank Ltd. | 2003| 2. 6 Interest based traditional banks with Islami banking branch: v Prime Bank Ltd. v Dhaka Bank Ltd. v Southeast Bank Ltd. v Premier Bank Ltd. v Some other banks are thinking about the opening of Islamic branches. 2. 7 Objectives of Islamic bank in the modern age: The objectives of Islamic banking may be outlined as below:
O To offer contemporary financial services in conformity with Shariah. O To contribute towards economic development and prosperity within the principal of Islamic justice. O To undertake financial activities which ethical, socially desirable and profitable. O To serve desirable ummat al Islam and other nation having Muslim population. 2. 8 Problems faced by Islamic Banks: The problems faced by Islamic banks in their operation are as follows: O Shortage of professionals conversant with Islamic banking O Several competition in the financial sector
O Economic showdown and political situation in some of the countries O Total lack of familiarity by international financial and non- financial sector with Islamic product O Inadequate track records of Islamic banking itself in particular and Islamic banks in general O Absence of infrastructure for Islamic trade financial on international basis O Relatively under developed corporate sector and capital market in Islamic countries. 3. 1Historical Overview of SIBL: Social Investment Bank Ltd. (SIBL) is committed to implement the principles f participatory economy with human face approach to credit and banking on the basis of sharing profit and loss with a view to empowering the family as the basis of a social unit. In the context of these principles, operational aspects of the Bank have been set out to encompass three sector-banking model into (01) Formal, (02) Non Formal and (03) Voluntary. Third sector with a comprehensive program for total Socio-economic development for all. The philosophy of “Working Together for a Caring Society” of the bank towards poverty alleviation is well integrated in these Configurations.
Following are the important historical events of this unique model Bank: February 02, 1989: – The concept and three sector model of Social Investment Bank Limited (SIBL) was formally presented and discussed with His Excellency Late Prof. Dr. Ahmed AL-Nagger of Egypt, who is considered to be the father of modern Islamic Banking as well as Prof. Dr. A. Wadoud Shalaby of Al-Azhar University, Cairo. April 21, 1989: – The concept of this Bank was presented and then a series of discussions took place with His Excellency Dr.
Abdullah Omar Nasseef of Saudi Arabia, Vice Chairman, Majlish-e-Shura, the Kingdom of Saudi Arabia and former President of the King Abdul Aziz University and Secretary General of the world Muslim League. July 04, 1989: – This model of Banking was presented and then a series of discussions took place with His Excellency Dr. Hamid Al-Gabid, Secretary General of the Organization of Islamic Conference (OI C) of 53 Muslim Countries. September 24, 1989: – Model of SIBL presented before the president and cabinet at Banga Bhaban by founder chairman of the bank.
September 30, 1989: – Formal application for SIBL made to Bangladesh Bank. December 6, 1994: – Letter of intent for SIBL received from Bangladesh Bank. July 5, 1995: – Certificate of Incorporation received. August 21, 1995: – Permission to open First Branch of the Social Investment Bank Limited (SIBL) at Dhaka was given by Bangladesh Bank. November 22, 1995: – After a long journey, SIBL was formally opened at 15, Dilkusha C/A, Dhaka by the Honorable President of the People’s Republic of Bangladesh in a grand ceremony. 3. 2 Vision of SIBL:
Social Investment Bank Limited started its journey with the concept of 21st Century Islamic participatory three sector banking model: a) Formal Sector – Commercial banking with latest technology, b) Non-formal Sector – Family empowerment Micro-credit & Micro-enterprise program and c) Voluntary Sector – Social Capital mobilization through CASH WAQF and others. Finally, “Reduction of Poverty Level” is their Vision, which is a prime object as stated in Memorandum of Association of the Bank with the commitment “Working Together for a Caring Society”. 3. 3 Mission of SIBL: * High quality financial services with the latest technology. Fast, accurate and satisfactory customer service. * Balanced & sustainable growth strategy. * Optimum return on shareholders equity. * Introducing innovative Islamic banking products * Attract and retain high quality human resource. * Empowering real poor families and create local income opportunities. * Providing support for social benefit organizations- by way of mobilizing funds and social services. 3. 4 Special Features of SIBL: The main features of this bank are as follows: – * All activities of the bank are conducted according to Islamic Shariah where profit is the legal alternative to interest. The banks investment policy follows different modes approved by Islamic shariah based on Quran & Sunnah. * The bank is committed towards establishing welfare oriented banking system, economic upliftment of the low income group of people, create employment opportunities. * According to the needs and demands of the society and the country as a whole the bank invests money to different Halal business. The bank participates in different activities aiming at creating job, implementing development projects taken by the government and developing infrastructure. The bank is committed to establish an economic system through social justice and equal distribution of wealth. It is committed to bring about changes in the underdeveloped rural areas for ensuring balanced socio-economic development of the country through micro credit program. * To render improved services to the clients imbued with Islamic spirit of brotherhood, peace and fraternity and by developing an institutional cohesion. 3. 5 Comparative Study on Commercial Banks With Special Reference to SIBL Model: SLNo. | Commercial Banks| SL No. | SIBL Model| 01. | Formal Banking including Foreign Trade and Foreign Exchange Business. 01. | Formal Banking as in no. 1 of commercial Banks including non-formal and voluntary sector Banking. | 02. | To mobilize deposit. | 02. | To mobilize deposit. | 03. | To give loan on interest basis. | 03. | To invest on profit-loss sharing basis. | 04. | To open current account, SB account, STD account and other accounts as admissible under Banking company’s Act of 1991. | 04. | To open Al-Wadia A/C, MSD A/C, MSND A/C and other accounts as admissible under Islamic Banking System of the country as per clause incorporated in Banking company’s Act of 1991. | 05. | To work as an agent of the client in business transaction. | 05. To work as an agent and partner in the business transaction as per Islami Shariah. | 06. | No special attention is given to Micro-Credit and Micro-Enterprises. | 06. | Special attention is given to Micro-Credit and Micro-Enterprises. | 07. | No attempt is made to empowerment of family development program. | 07. | Special attempt is made to empowerment of family development program. | 08. | Very little attention is given to alleviate poverty to build a caring society. | 08. | Special care is given to build a caring society through alleviation of poverty. | 09. | Concentration of Branches in urban areas for well to do persons. 09. | Concentration is given in urban as well as rural development. | 3. 6 Organizational Structure of Social Investment Bank Ltd. : Managing Director Deputy Managing Director Executive Vice President Senior Vice President Vice President Senior Assistant Vice President Assistant Vice President First Assistant Vice President Senior Executive Officer Executive Officer Senior Officer Officer Junior Officer 4. 1 Introduction: General Banking is the heart of total banking system as this department collects money from the depositor and the bank uses this deposit to earn profit. General Banking is the backbone of any bank.
Without it bank cannot do anything. The bank, which has effective General Banking system that bank, will achieve its goal effectively. A number of functions are performed in this division through different sections to ensure proper services to the customers. These are highlighted below: O Customer service section O Cash section O Remittance section O Account section O Clearing section and O Computer section 4. 2 Customer service section: Customer service is one of the most talked about subjects now a day. In banking, it’s a major tool to earn a competitive edge.
Customer service means to meet customer needs in a prompt and efficient way. Customer service section the prior section because first of all customer wants to collect information before taking service. If customer satisfied with the information given by the customer service section then they would come to take services. In this sense it is very sensitive section. It is the duty of this section’s staff to satisfy their valuable customers by giving the right information. 4. 2. 1 Function of this section: O Account opening O Cheque book issuing O Signature issuing O Account inquiry O Amendments
O Solvency certificate O Hold statement O General service O Control and documentation of client file O A/C transfer O A/C Closing 4. 3 Types of Account: 1. Al-Wadiah Current Deposit Account 2. Mudarabah Savings Deposit Account(MSD) 3. Mudarabah Special Notice Deposit Account 4. Mudarabah Term Deposit Receipt 5. Mudarabah Monthly Profit Deposit Scheme 6. Mudarabah Millionaire Savings Scheme 7. Mudarabah Education Deposit Scheme 8. Mudarabah Special Deposit Pension Saving Scheme 9. Mudarabah Monthly Savings Scheme 10. Mudarabah Bashasthan Savings Scheme 11. Mudarabah Hajj Saving Scheme 12. Cash Waqf
A) Al-Wadiah Current Deposit Account Drawings are allowed from such an account without any restriction within the funds available in its credit. Rules for Al-Wadiah current deposit account are as follows: O Al-Wadiah Current Deposit A/Cs is opened on proper introduction with minimum initial deposit fixed by the Bank. O Al-Wadiah deposit is accepted on Al-Wadiah Principles, which mean al Amanah with permission to use. According to this principle Bank can use the fund of the account along with other funds as per Shariah at bank’s own risk. Account holder(s) will not share any profit/Loss.
O The law and regulation of Bangladesh, usual customs and procedures common to banks in Bangladesh including Islamic Banking Principles shall apply to and govern the conduct of account opened with the Bank. O Withdrawal can be made only through cheques issued by the Bank. O The A/C holder(s) shall preserve the cheques book with utmost care so that it might not be lost or stolen. For any misappropriation taken place through any such stolen or lost cheques, the Bank shall not be held responsible. O The depositor shall take back the pay-in-slip after deposit of any money or cheques etc. learly specifying the number and title of account in the slip. All cheques, DD/PO etc. shall be crossed before deposit. O Bankers shall note ‘Stop payment’ of the account holder with due care. Payment of any such cheques, the Bank shall not be held responsible. O Bank charges can be debited from the concerned account. O Any change in the address of the account holder should immediately be communicated to the Bank. The Bank for delay shall accept no responsibility, non-delivery or any misdelivery of letters and remittances etc. sent through post office or other agents. O Bank makes entry in the account with due care.
However, for any wrong entry, the Bank reserves the right for adjustment/correction and no responsibility can be accepted by the Bank for any loss caused by the account holder due to such inadvertent/wrong entry passed by the Banker. O The Bank reserves the right to close any account without notice and alter, add any or all of the rules and such altered/additional rules shall immediately thereafter be deemed to be binding on the account holder. B) Mudarabah Savings Deposit Account: Individuals for saving purpose open this type of account. The withdrawals are restricted in respect of volume and frequency.
This type of account is suitable for non-trading members of public with small saving who seldom need to withdraw money from his account. Interest is allowed on minimum monthly balances, not on daily balances. These are accounts intended for individual savings are not suitable for business concerns that require frequent withdrawals. C) Mudarabah Term Deposit Account: These are also profit bearing deposit accounts. Rules governing Mudarabah Term Deposit account are as follows: O Mudarabah Term Deposits are accepted by the bank with a sum of Tk. 000 or above (multiple of 1000) from individuals (single and joint), firms (proprietorship/partnership), limited companies, autonomous bodies, charitable institutions, association, educational institution, local bodies, trusts etc, against issuance of non transferable receipts in acknowledgement of MTD received. MTD Account may be opened in the names of minors jointly with their guardians. O The Mudarabah Term Deposits are accepted for periods of 3, 6, 12, 24 & 36 months.
O The bank reserves the right to invest the funds received in the Mudarabah Term Deposit Accounts, in its sole judgments, in any interest-free “ halal” business it deems fit. O Mudarabah Term Deposit Account holder will share the profit of investment with Social Investment Bank Limited, at the rate declared by the bank from time to time. Any loss, which cannot be covered by the Investment Loss Offsetting Reserve, will be adjusted from Mudarabah fund and in that case the bank shall not take any remuneration for the service rendered in managing the fund.
O The profit earned on Mudarabah Term Deposit Account will be credited as determined by the bank at its sole discretion on the basis of its net working results at the end of the year, within a reasonable time form the date of the close of the books of accounts of the bank. The bank’s decision in this respect will be final & binding on the Mudarabah Term Depositors. If the Mudarabah Term Deposit Account is closed before declaration of profit of current year, the depositor shall accept profit at the rate declared in the preceding year.
In that case, both the bank & the depositor will relinquish their claim on difference amount of profit, which may accrue at the close of the year. O The account holder is not allowed to withdraw the amount before maturity date. But on obtaining the bank’s prior consent the depositor(s) may withdraw the deposit before maturity without any profit i. e. no profit no loss basis. O MTD Account holder may withdraw the profit amount annually if he so desires on condition the final adjustment. If needed, will be made at the end of the year. MTD account holder will give an undertaking to that effect.
O If the profit amount is not withdrawn it will automatically be added to the principal amount annually and the entire amount will earn profit/loss. O MTDR is not transferable instrument & as such it cannot be endorsed in favor of others. O The Mudarabah Term Deposit Receipt (MTDR) should be preserved properly. In case of loss, the Account holder should notify the issuing branch immediately by quickest possible means so that the Bank can take care of. O Matured deposit if not encashed within one month of maturity, the deposit shall automatically be renewed for the period it kept before.
O Any change in the address of the depositor should be immediately communicated to the bank. No responsibility can be accepted by the bank for delay, non-delivery etc. of letters, remittances etc. sent through Post Office and other agents. O The bank retains the right of refusing to accept any deposit from any person in MTD account without assigning any reason. O The bank reserves the right to add or alter any or all the rules governing MTD and such altered or additional rules shall be immediately thereafter be deemed to be binding on all depositors.
D) Mudarabah Monthly Profit Deposit Scheme: Rules governing Mudarabah Monthly Profit Deposit Scheme are as follows: O Mudarabah Monthly Profit Deposit Scheme are accepted by the bank with a sum of Tk. 50,000. 1, 00,000. 1, 50,000. 2, 00,000. 2, 50,000. 3, 00,000 & multiple of those amounts. O The duration of deposit is minimum 3 years. O The current profit rate of MMPD is 10. 80%. O The depositor due his profit from deposit date to one month later. But the due profit is deposited the client(s) mudarabah savings account last week of the month.
O Generally the client(s) cannot drawings his amount before 3 years. But, in unavoidable situation any client(s) can draw his deposit before 3 years, at that situation additional profit adjusted on his deposit with mudarabah savings account general rules & law of the bank. O The client(s) must be correctly filled-up his deposit account form. O The client(s) must be open a mudarabah savings account where his monthly profit was deposited. O A non-transferable receipt was given the client(s) against his deposit. O If the client(s) address was changed, then it must be informed to the bank.
E)Mudarabah Special Notice Account: This term deposits are kept with the bank for a specified short period of time and on which noticed must be given to bank before withdrawal of account. F) Mudarabah Special Savings (Pension) Account: This account can open any Bangladeshi citizens of 18 years & above. The savings of this account give the client after maturity, if the client was dead then it give to his nominee. The client must deposit his installment within the 15th of the month. If the nominee was dead before maturity, then the client can change his nominee.
The duration of this account cannot be changed. The client can transfer of this account any branch of SIBL through an application. The client can stop this account before maturity, in this purpose Tk. 25 service charge must be paid. The profit rate of this account for 5 years is 10% & for 10 years is 10. 25%. G)Mudarabah Term Savings Scheme Account Based on Monthly Deposit: The duration time of this account is 5,8,10& 12 years. Monthly installment is Tk. 200, Tk. 300, Tk. 500, Tk. 1000, Tk. 1500 & Tk. 2000. The deposit of this collect by the Mudarabah method.
The client can choose any installment in this system, after choosing an installment it can’t be changed. One person can open different account by different installments in the same branch. The installment amount must be paid within the 15th of the month. If govt. fixed any type of income tax or duty fee, then the amount paid to the client’s account. H)Mudarabah Millionaire Scheme: In this scheme the bank collect money in the principles of Islamic Shariah on the basis of monthly installment of Tk. 550, Tk. 1050 & Tk. 2050. In this scheme the deposit collect for 15years, 20years & 25years term.
I) Bhashastan Deposit Scheme: In the first-born time man lived in the cave or Forrest. Thereafter, House is count one of important basic needs of the man. But in the 21st century most of the people of our country are not opportunity to live in the house. It is now count a great national problem of our country. For solution of this problem Social Investment bank Limited takes an initiative to reduce this problem & launched a 15 years term project named “Bhashatan Deposit Scheme”. In this scheme client(s) can deposit Tk. 500, Tk. 1000, Tk. 1500, and Tk. 000 in the monthly installment basis & after 15 years they can draw with profitTk. 260000, Tk. 520000, Tk. 780000&Tk. 1040000. j) Mudarabah Hajj/Umrah Savings Account: The rules of this account are as follows: O The title of the account is Mudarabah Hajj/ Umrah Savings Account. O Any Bangladeshi Muslim can open this account. O This account operating Mudarabah rules. O Passbook was given to the client(s). O If the client(s) address was changed, it must be informed to the bank. O Those who open the Hajj/Umrah account in a year (like-2002), the fixed installment rate was count on that year.
O Introducer needed for opening of this account. O When open this account the client chooses any type of installment, which not is change in future. O If this account closed before maturity, then the profit was given at Mudarabah savings account rate. O The installment of Mudarabah Hajj/Umrah savings account must be paid within the 10th of every month. O If simultaneously three installments were not deposited then it was automatically converted into Mudarabah Savings account. O No amount was drawn from this account, so no cheques book given to the client(s).
From the above provision of Negotiable Act, It follows that a demand draft is Negotiable Instrument. The legal provisions as to crossing, Endorsement, Collection and payment in due course are the same as for cheques. k) Cash Waqf: “Man’s work ends upon his death except for three things: (a) contribution to knowledge, (b) on going charity and (c) faithful child (Al-Hadith)”. The introduction of cash waqf certificate scheme is intended to monetize Islamic voluntary sector for the first time in history of mobilization & capitalization of social savings. It would erhaps, be the most effective & perpetual mode of deposit mobilization & use of its profit for perpetual social investment & benefits. 4. 4 Account Opening Procedure: O Application O Reference and Inquiries O Submission of documents O Deposit O Papers are required for opening various types of Account – 4. 4. 1Individual / Joint: Two copies of photograph of the account holder(s) who operate the account. In joint account every persons must submit photograph. 4. 4. 2 Proprietorship firm: i. Two copies of photograph of the account holder(s) who operate the Account. ii.
Certified copy of valid trade license. 4. 4. 3 Partnership firm: i. Two copies of photograph of the account holder(s) who operate the Account. ii. Certified copy of valid trade license. iii. Certified copy of partnership deed duly signed by all the partners. iv. Partnership Account Agreement (Draft enclosed). 4. 4. 4 Limited Company: i. Two copies of photograph of the Account holder(s) who operate the Account. ii. Certified copy of Memorandum & Articles of Association. iii. Certified copy of Certificate of Incorporation. iv. Certified of Certificate of Commencement of Business (in case of public limited company). . List of Directors. vi. Certified copy of resolution of the Board of Directors for opening and operation of the Account. 4. 4. 5 Club/Society /School/ College: i. Two copies of photograph of the Account Holder(s) who operate the Account. ii. Certified copy of Memorandum & Articles of Association iii. Certified copy of Resolution for opening and operation of the Account. iv. Up-to-date list of office bearers/Governing body/Managing committee. 4. 4. 6 Trust: i. Two copies of photograph of the Account holder(s) who operate the Account. ii.
Up-to-date list of members of the Trustee Board. iii. Certified copy of Deed of Trust. iv. Certified copy of Resolution of the Trustee Board for opening and operation of the Account. 4. 5 Remittance Section: When one bank sends its money from one place to another for customer convenience is called remittance. To forward money, remittance section collects money or cheque from customer at one branch and sends it to the required place of the customer preference. To perform this job, the section takes charge in different manner for different transaction, such as Pay Order, Demand Draft etc.
With the help of remittance section, customers can avoid risk to send money from one place to another. 4. 5. 1 Functions of this section: Different functions are performed by this section which is outlined below: O Handling of incoming and outgoing TT O Demand Draft handling O Pay Order handling O Outstation cheque collection O Purchase and sale of currency notes O Returns submit to Bangladesh Bank O Other miscellaneous work of the section 4. 5. 2 Earnings of this section: O Pay Order charges O Demand Draft charges O T. T. charges
O Outstation cheque collection charges 4. 5. 3 Issuance of Demand Draft: O The customer is asked to complete filling in a form, which is treated as an application as well as voucher. The application form should be checked carefully. O Commission charges are calculated & inserted in the case provided on the form. O The voucher given to the customer to deposit the cash with the cashier. O The cashier receives the cash & delivers the voucher to Remittance department against initial in his Book. O Draft is prepared & entered in Drafts issued Register.
O The draft number is written on the voucher. O Draft block & the voucher along with the register are sent to the officer in charge for checking & signatures. He/She signs the draft & vouchers & initials the counterfoil of the draft & the Register. O Then the draft & the voucher are sent to the second officer for second signature. O The draft is crossed if customers desires & delivered to him against his acknowledgement on the voucher. 4. 5. 4 Cancellation of DD: The purchaser may request to cancel the draft purchased by his & asked for refund of money.
For cancellation of a draft the following are considered- O On receipt of application along with the demand draft for its cancellation the signature of the application is verified from the original application form & the genuineness of the DD is examined. O Before the draft is cancelled it is ascertained that no duplicate draft has been issued. O If the date of issue of draft is much earlier, consent of the payee in writing should be obtained. O If the draft is in favor of a company, semi-government body or government official consent of payee in writing is essential.
O If the draft has been negotiated, the draft should be crossed but in no case tom, & the draft be marked be ‘cancelled’. A note in respect of cancellation should be made in the draft issued register & the application. O The cancelled draft should be attached to debit voucher along with the request letter of the purchaser. O The drawee branch must be advised about the cancellation of the draft. 4. 5. 5 Pay Order: O A pay order is a written order, issued by branch of a bank, to pay a certain some of money to specified person or a bank.
It may be said to be banker’s cheques as a bank drawn upon & payable issues it by itself. O A pay order is issued & paid by the same branch of a bank & as such, the drawer & drawee are the same. The persons or the organization in whose favor it is issued is known as payee or the beneficiary. It is sometimes sold to individual on payment of value that may not be a customer & is called the purchaser. O The purchaser should sign the standard application form giving detailed particulars & request for issue of pay order.
The payee or beneficiary must not appear to be fictitious. His full name & address should be written on the application. Commission for pay order is recovered from the purchaser. O A pay order is divided into three parts viz. the actual pay order, the second counterfoil to be retained by the payee & the first counterfeit to be retained by the issuing branch as record. 4. 5. 6 Purpose of Pay Order: O The purpose of pay order is to transfer of fund from one hand to another. Such transfer of fund should be for a specific purpose only.
That is, when a bank intends to make payment on its own behind or an individual desires to furnish a guarantee of payment by a bank on his account to someone else who does not accept his cheques. It is used for undischarged liability. O A pay order may be issued to affect payment on its own account by one bank to another bank in settlement of cheques returned after clearing hours. O It may be issued by the bank in payment of its other dues like Income Tax, House Rent etc. O A pay order may also be sold to any person who desires to offer the same in payment of the earnest money & other dues to Govt. gencies. O Autonomous bodies, Companies, Local authorities etc. in the course of business & other dealings. 4. 5. 7 Payment of Pay Order: O Pay order is paid to the payee of beneficiary after proper identification or it may be credited to his account. O If presented by some other branch or bank, the pay order should bear discharge of payee, & the collecting branch or bank should confirm the discharge & also certify ‘Payees Account Credited’. O Before making payment the signature of issuing officers should be verified & the date of payment should be marked in the register. 4. 5. Telegraphic Transfer (T. T. ): Sometimes the remitter of the funds requires fund immediately. In that case, the banker is requested to remit the funds telegraphically. Different modes are Telegram, Telephone, Telex, and Fax. Telegraphic Transfer is the most rapid and convenient but expensive method. The drawer and the payee should have accounts with Social Investment Bank Ltd. TT is issued against cash, cheque, and letter of instruction. 5. 1 Introduction: Banking sector plays an important role in mobilization of the countries scattered saving and channeling the same into various desirable sectors of the national economy.
In order to over come some of the major lapses of the nationalized commercial banking, to achieve the objectives of greater mobilization of internal resources and to provide better banking service, the Government took decision in 1980 to allow private sector. Islamic banks are a large private sector bank and are established in developing countries like Bangladesh. Inadequate accommodation and the frequent and drastic charges in economic policies are but a few of the institutional difficulties with which Islamic institutional have to copy. This situation is bound to restrict their role in medium and long term financing.
Investment is the most profitable as most risky function performed by SIBL. The bank invest to the Profit and Loss sharing investment and the banks helps by purchase goods at the request of the clients and sell the goods at the cost plus declared profit. 5. 2 Investment Policy of the Bank: The special feature of the investment policy of the bank is to invest on the basis of profit-loss sharing system in accordance with the tenets and principles of Islamic rather emphasis is given in attaining social good and in creating employment opportunities.
Further in order to diversity investment portfolio, the bank engaged itself in investment operation through special scheme. The bank has other new invest schemes such as Micro Credit and Micro enterprise, self –employment scheme, apartment projects investment scheme, apartment projects investment scheme, household durable investment scheme etc. Besides, the bank is financing various economic groups in different sectors in both urban and rural area for upliftment of their economic condition. 5. 3 Objectives and principles of investment:
The objectives and principles of the investment operations of the bank are – O To invest fund strictly in accordance with the principles of Shariah. O To diversity its investment portfolio by size of investment, by sectors of investment, industrial, commercial and by geographical area. O To ensure mutual benefit both for the bank and the investment client – by professional appraisal of investment proposals, judicious sanction of investment, close and constant supervision and monitoring thereof. O To increase the number of potential investors by making participatory and productive investment.
O To finance various development scheme for poverty alleviation, income and employment generation with a view to accelerate sustainable socio-economic growth and upliftment of the society. O To invest in the form of goods and commodities rather than give out cash money to the investment clients. O To avoid even highly profitable investment in fields forbidden under Islamic Shariah and are harmful for the society. 5. 4 Organizational Aspects of Investment Division of SIBL: There is no standard form of organization that exists among banks as a whole. The organization depends upon various factors including the character and uality of landing officers, the size of loan portfolio, the type of loans made and attitude of the board of directors towards the degree and amount of authority delegated. SIBL has separate division for investment management. At the branch level there is no separate investment division. The investment functions are performed by branch manager with the assistance of few investment officers. The branch manager has to take investment decision subject to the following rules: O Credit restrictions as imposed by Bangladesh Bank. O Credit restrictions issued by head office. 5. Different Modes of Investment followed by the Islamic Bank: Investment is the action of deploying funds with the intention and expectation that they will earn a return for their owners of a fund can deploy it through real investment or financial investment. When resources are spent to purchase fixed and current assets for use in a production process for trading purpose, then it can be termed as real investment. For example, deposit of money with a bank, purchase of Mudarabah Savings Bond or share of a company. Financial investments ultimately takes form of real investment as it is meant for so. Since hoarding is condemned by Islam and a 2. percent annual tax (Zakat) is imposed on savings, the owner of a fund, if he is unable to make real investment, has no option but to invest his savings as a financial investment. Modes of investment followed by Islamic bank are exercised under three principles. 1. Bai-(Buy & Selling) Mechanism 2. Sharing (profit & Loss) Mechanism 3. Ownership Sharing Mechanism Modes of investment under three principles can be presented by using chart as follows – Modes of Investment | Bai-Mechanism | Sharing Mechanism| Ownership Mechanism| a. Bai-Murabah b. Bai-Muazzal c. Bai-Salam d. Bai-Istisna | a. Mudarabah b.
Musharaka| a. Hire purchase under Shirkatul Meelk| 5. 6 Bai-Mechanism: 5. 6. 1 BAI – MURABAHA: Meaning: The terms ‘Bai – Murabaha’ have derived from Arabic words Bai and Ribhun. The word ‘Bai’ means purchase and sale and the word ‘Ribhun’ means an agreed upon profit. Bai – Murabaha means sale for an agreed upon profit. Definition: Bai-Murabaha may be defined as a contract between a Buyer and a Seller under which the seller sells certain specific goods permissible under Islamic Shariah and the Law of the land to the Buyer at a cost plus agreed profit payable on cash or on any fixed future date in lump-sum or by installments.
The profit marked-up may be fixed on lump-sum or in percentage of the cost price of the goods. There are different types of Murabaha as given bellow: Types of Murabaha: In respect of dealing parties Bai-Murabaha may be of two types. 1. Ordinary Bai-Murabaha: Ordinary Bai-Murabaha is a direct transaction between a Buyer and a Seller. Here, the Seller is an ordinary trader who purchases goods from the market in the hopes of selling these goods to another party for a profit. In this case, the Seller undertakes the entire risk of his capital investment in the goods purchased.
Whether or not he earns a profit depends on his ability to find a buyer for the merchandise he has acquired. 2. Bai-Murabaha on order and promise: This transaction involves three parties- the buyer, the seller, and the bank. Under this arrangement, the bank acts as an intermediary trader between the buyer and the seller. Where the Bank upon receipt of order from the buyer with specification and a prior outstanding promise to buy the goods from the bank, purchases the ordered goods and sells those to the ordering buyer at a cost plus agreed profit, the sale is called “Bai-Murahaha on order or promise’ generally known as Murabaha.
In this case, capital with profit is almost secured by promise. This Murabaha upon order and promise is generally used by the Social Investment Bank Ltd. This undertakes the purchase of commodities according to the specification requested by the clients and sale on Bai-Murabaha to the one who order for the goods and promised to buy those for its cost price plus a marked-up profit agreed upon previously by the two parties, the Bank and the client Therefore, it is a sale of goods on profit by which ownership of the goods is transferred by the Bank to the client but the payment of the sale price (cost plus profit) by the client is deferred or a fixed period. To make it more clear, it may be noted here that Bank is financier to the client not in the sense that the bank finances the purchase of goods by the clients as conventional Bank does, rather it is a financier by deferring the receipt of sale price of the goods sold by the Bank to the client. There is a chance for happening of a loan and earning of interest under the wrong practice on Bai-Murabaha.
If the bank does not purchase the goods or does not make any purchase agreement with seller under this agreement of Bai-Murabaha that will be a remittance of the amount on behalf of the client, which shall be nothing but a loan to him and any profit on this amount shall be nothing but interest. Therefore, to make a true practice of Bai-Murahaha, purchase of goods by the Bank should be for and on behalf of the Bank and the payment of price of goods by the Bank must be made for and on behalf of the Bank. Important Features: 1.
It is permissible for the Client to offer an order to purchase by the Bank particular goods deciding its specification and committing himself to buy the same from the Bank on Murahaha i. e. cost plus agreed upon profit. 2. It is permissible to make the promise binding upon the Client to purchase from the Bank, that is, he is to either satisfy the promise or to indemnify the damages caused by breaking the promise without excuse. 3. It is permissible to take cash or collateral security to guarantee the implementation of the promise or to indemnify the damages. 4.
It is also permissible to document the debt resulting from Bai-Murabaha by a guarantor or a mortgage or both like any other debt. Mortgage or Guarantee or Cash Security may be obtained prior to the signing of the Agreement or at the time of signing the Agreement. 5. Stock and availability of goods is a basic condition for signing a Bai-Murabaha Agreement, therefore, the bank must purchase the goods as per specification of the Client to acquire ownership of the same before signing the agreement. 6. After purchase of goods the bank must bear the risk of goods until those are actually sold and delivered to the client, i. . after purchase of the goods by the Bank and before selling of those on Bai-Murabaha to the Client buyer, the Bank shall bear the consequences of any damages or defects, unless there is an agreement with the client realizing the Bank of the defects, that means, if the goods are damaged, bank is liable, if the goods are defective the bank bears the responsibility. 7. The Bank must deliver the specified goods to the client on specified date and at specified place of delivery as per contract. 8. The Bank shall sell the goods at a higher price (Cost + Profit) to earn profit.
The cost of goods sold and profit mark-up therewith shall separately and clearly be mentioned in the Bai-Murabaha Agreement. The profit mark-up may be mentioned in lump sum or in percentage of the purchase or cost price of the goods. But, under no circumstances, the percentage of the profit shall have any relation with time or expressed in relation with time, such as per month, per annum etc. 9. The price once fixed as per agreement and deferred and cannot be further increased. 10. It is permissible for the bank to authorize any third party to buy and receive the goods on Bank’s behalf the authorization must be in a separate contract.
These features make Bai-Murabaha identical from all other modes of Islamic Investment. There are certain steps to accomplish a deal of Bai-Murabaha as shown below. Steps of Bai-Murabaha Practiced by SIBL: First Step: Submission of proposal The Client sends a proposal with the specifications of the commodity to be acquired from the bank. The proposal also indicates details regarding the date, time and place of delivery as well as price and form of payment information. The bank responds by sending a counter proposal either accepting the buyer’s price or stipulating a different price.
Second Step: Signing a promise to purchase The client promises to buy the commodity from the bank on a Bai-Murabaha basis for the stipulated price. The bank accepts the order and establishes the terms and conditions of the transaction. Third Step: The first sale contract The bank informs the client of its approval of purchasing the commodity. The bank may pay for the goods immediately or accordance with the agreement. The seller expresses its approval to the sale and sends the invoice(s). Fourth Step: The Signing of a Murabaha Sale Contract
The two parties (the bank and the client) sign the Bai-Murabaha sale contract according to the agreement to purchase. Fifth Step: Delivery and Receipt of the Commodity The bank authorizes the client or his nominee to receive the commodity. The seller sends the commodity to the place of delivery agreed upon. The client undertakes the receipt of the commodity in its capacity as legal representhative and notifies the bank of the execution of the proxy. 5. 6. 2BAI-MUAJJAL: Meaning: The terms ‘Bai’ and ‘Muajjal’ are derived from the Arabic words ‘Bai’ and ‘Ajal’.
The word ‘Bai’ means purchase and sale and the word ‘Ajal’ means a fixed time or fixed period. “Bai-Muajjal” is a sale for which payment is made at a future fixed date or within a fixed period. In short, it is a sale on Credit. Definition: The Bai-Muajjal may be defined as a contract between a buyer and a seller under which the seller sells certain specific goods permissible under Shariah and law of the country to the buyer at an agreed fixed price payable at a certain fixed future date in lump sum or in fixed installments. Important Features:
There are some important features of Bai-Muajjal as given below: 1) It is permissible and in most cases the client will approach the bank with an offer to purchase a specific good through a Bai-Muajjal agreement. 2) It is permissible to make the promise binding upon the client to purchase the goods from the bank. In other words, the client is required to either satisfy the promise or to indemnify the bank for damages caused by breaking the promise without excuse. 3) It is permissible to take cash or collateral security to guarantee the implementation of the promise or to ndemnify the bank for damages caused by non-payment. 4) It is also permissible to document the debt resulting from Bai-Muajjal by a Guarantor or a mortgage or both, like any other debt. Mortgage/ Guarantee/ Cash security may be obtained prior to the signing of the agreement or at the time of signing the agreement. 5) Stock and availability of goods is a basic condition for signing a Bai-Muajjal Agreement. Therefore, the Bank must purchase the goods in accordance with the specifications of the client prior to signing the Bai-Muajjal Agreement with the client. ) All goods purchased on behalf of a Bai-Muajjal agreement are the responsibility of the bank until they are delivered to the client. 7) The bank must deliver the goods to the client at the time and place specified in the contract. 8) The Bank may sell the goods at a higher price than the purchase price to earn profit. 9) The price is fixed at the time of the agreement and can not be altered. 10) The bank is not required to disclose the profit made on the transaction. 5. 6. 3 BAI-SALAM: Meaning: The terms “Bai” and “Salam” have been derived from the Arabic words.
The words ‘Bai’ means ‘sale and purchase’ and the word ‘Salam’ means ‘Advance’. Bai-Salam means advance sale and purchase. Definition: It is a sale in which an advance payment is made by the buyer, but the delivery is delayed to an agreed future date. In the Bai-Salam, a financial transaction happens in advance in cash as a price of commodity whose delivery will be in a future date. It means deferred is the commodity sold and price of the commodity described is to be aid immediately in advance. The Bai-Salam sales serve the interest of both parties: 1.
The seller – receives advance payment in exchange for the obligation to delivery the commodity at some later date. He benefits from the salam sale by locking in a price for his commodity, thereby allowing him to cover his financial needs whether they are personal expenses, family expenses or business expenses. 2. The purchaser benefits because he receives delivery of the commodity when it is needed to fulfill some other agreement, without incurring storage costs. Bai-Salam agreement allows the purchase to lock in a price, thus protecting him from price fluctuation. Important features: 1.
Bai-Salam is a mode of investment allowed by Islamic Shariah in which commodities/ products can be sold without having the said commodities/ products either in existence or physical/ constructive possession of the seller. 2. Generally, industrial and agricultural products are purchased/ sold in advance under Bai-Salam mode of investment to infuse finance so that production is not hindered due to shortage of fund/ cash. 3. Bai-Salam investment may also be allowed in export-oriented industries. This can be allowed after opening of the L/C, arrival of raw materials, shipment of raw materials etc.
The bank may sell/export its good through the seller/ exporter (client) under a separate agreement or this may be done duly incorporating in the Bai-Salm agreement unless otherwise settled and prescribed. The price of deal shall be fixed up keeping in view the export/ sale price mentioned in the relative export L/C contract and the bank shall fix up its profit. 4. It is permissible to obtain collateral security from the seller client to secure the investment from any hazards viz. , non-supply/partial supply of commodities products, supply of low quality commodities/ products etc. 5.
It is also permissible to obtain mortgage and / or personal guarantee from a third party as security before signing of the agreement or at the time of signing the agreement. 6. The seller (manufacturer) client may be made agent of the bank to sell the goods delivered to the bank by him provided a separate agency agreement is executed between the bank and the client (agent). Steps of the Bai-Salam sale: 1. Cash sale or sale on credit: – The Bank pays the price in the contract meeting so that the seller makes use of it and covers his financial needs. The seller abides the delivery of the commodity on the specific due date. . Delivery and receipt of the commodity on the due date: – There are several options for delivery available to the bank. a) The bank may receive the commodity and resell it to another party for cash or credit b) The bank may authorize the seller to find another buyer for the commodity c) The bank may direct the seller to deliver the commodity directly to a third party with whom the bank has entered into another agreement. 3. The sale contract: – The bank agrees to sell the commodity for cash or a deferred price, which is higher than the salam purchase price.
The buyer agrees to purchase and to pay the price according to the agreement. Rules of Bai-Salam: 1. Commodity should be known: It is a condition that the commodity should be known by both parties to the agreement. Misunderstandings about the commodity may lead to disputes, which could void the contract. 2. Monitoring by specification: It is a condition that the commodity be monitored closely, as very little variation from specifications in the contract is allowable. If the commodity cannot be monitored for quality standards a salam transaction is impermissible. . Availability of goods for delivery: It is a condition that the commodity be deliverable on the due date. If there is uncertainty about the ability to deliver the commodity at the due date, a salam transaction is impermissible. 4. Commodity is a Liability Debt on the seller: It is a condition that the commodity is a liability debt. The seller is obliged to deliver the commodity when it is due, according to the specifications stipulated in the contract, whether or not his firm produces the commodity or obtained from other firms. 5.
Salam on existing goods: Salam sale is impermissible on existing commodities because damage and deterioration cannot be assured before delivery on the due date. 6. Salam on land and real estates: It is impermissible on land lots and real estates because the description or the real estate entails the location. If the location is determined then it is specified, which contradicts what the jurists agreed upon, that salam is a liability debt. 7. Salam on special item: Salam is permissible on a commodity of a specific locality if it is assured that it is almost always available in that locality and it rarely becomes unavailable. . Advance payment: It is a condition that the purchase price in salam is specified and advanced to the seller at the contract meeting. 9. Date of delivery known: It is a condition in salam sale that the due date is known to avoid ignorance which leads to dispute. 10. Delivery mechanism specified: It is a condition that the place of delivery is stated in the contract if the commodity requires special handling and delivery arrangements. 11. Provision for mortgage: It is permissible to take a mortgage on salam debt to guarantee that the seller satisfies his obligation by delivering the commodity on the due date. 12.
Parallel salam contract: It is permissible for the buyer of a salam commodity to sell the commodity before receiving it. It is known that the salam commodity is a liability debt to the seller and not a commodity that exists. However, it is permissible for the buyer to draw a parallel salam contract without connecting it to the first salam contract. 5. 6. 4 BAI – ISTISNA: Definition: The Istisna sale is a contract in which the price is paid in advance at the time of the contract and the object of sale is manufactured and delivered later. The majority of the jurists consider Istisna as one of the divisions of Bai-Salam.
Therefore, it should be treated under the definition of Bai-Salam. But the Hanafi School Fiqh declares Istisna as an independent and separate contract. The jurists of the Hanafi School have given various definitions to Istisna, some of which are: Under this contract the first party agrees to construct/ manufacture a particular product and deliver it to second party against a predetermined price. The price may not be required to pay in advance. It may be paid in installments, or can even be deferred until the desired product is delivered. Important Features: 1. Istisna contract is a sale contract.
It is a contract of promise to deliver the finished goods. 2. The subject matter of the contract is the commodity ordered by the buyer to be manufactured and not the work or services of artisan or manufacturer. 3. The subject matter of the contract is deemed to be non-existent in the market at the time of contracting and the purpose of the contract is to manufacture a product and bring it into existence. 4. The product to be manufactured should be duly described in the contract in a clear manner. 5. The realm of this contract of goods that are subject to manufacturing. It does not include any natural goods like fruits, sugar, milk etc. . The contract of Istisna once signed/ made, becomes irrevocable. If the manufactured product does not agree wit