Istisna l Manufacturing Finance Istisna l How Istiana works?

Istisna in manufacturing finance isdefined below how Istisna works.

• Istisna is an exceptional mode of Sale, at an agreed price, whereby buyer place an order to manufacture, assemble or construct, or cause so to do anything to be delivered at a future date.
• The commodity must be known and specified to the extent of removing any ambiguity regarding it's specifications including kind, type quality and quantity.
  
• Price of goods to be manufactured must be fixed in absolute and ambiguous terms.The agreed price may be paid in lump sum or in installments in the matter mutually agreed by the parties.
• Providing the material required for manufacture of commodity is not the responsibility of the buyer.
• Unless otherwise mutually agreed, any party may cancel the contract unilaterally if the seller has not incurred any direct or indirect cost in relation thereto.
• If goods manufactured conform to the specifications agreed between the parties, the orderer (purchaser) cannot decline to accept them if there is an obvious defect in such goods. However , the agreement can stipulate that if the delivery is not made within the mutually agreed time period, then the buyer can refuse to accept goods.
• In Istisna transactions the buyer shall not, before taking possession (actual or constructive) of the goods sell, or transfer ownership in the goods to any other person. 
• If the seller fails to deliver the goods within the stipulated period, the price of the commodity can be reduced by a specified amount per day as per the agreement.

these were the concept of manufacturing Istisna how Istisna works and integrate with any financial institution.

Risk involvement and mitigation in Murabaha Financing

Murabaha is a sale agreement where an islamic economic group (IFI) sells goods, commodities or belongings to a consumer on deferred fee basis.
Sharia requires an IFI to first acquire the name and possession to the goods/assets earlier than moving into murabaha with its client. This is surely because one cannot promote some thing which it does not own.
The IFI's full legal ownership and possession over the goods or belongings is accordingly a pre-requisite for stepping into a murabaha transaction with a customer.
The ownership to the murabaha items or belongings will be bodily or constructive as well. Through positive I suggest through a trustee. As an instance, in import of goods by means of deliver, the industrial bill is taken into consideration the identify report to the goods whereas the bill of lading (issued with the aid of the shipping enterprise) is the document for positive possession.
That is due to the fact the delivery organisation which, Owns the vessel is sporting the products for the importer inside the capability of its trustee, thereby establishing constructive ownership to the products by means of the importer.
As such, a murabaha transaction for the imported goods can not take vicinity unless the ifi establishes the letter of credit in its very own call as customer. This differentiates an IFI from
A conventional bank which establishes the letters of credit in consumer's call.
Once the name and possession to the products or assets is with the IFI, it is able to sell the same to the consumer by using way of murabaha at an agreed price and fee terms.
The murabaha sale rate will include IFI's profit agreed to by using the patron.
The IFI components with the title and possession to the goods or assets in favour of the patron at the time of entering into a murabaha transaction whereas the payment of the purchase charge with the aid of it to the IFI can be made in future.
Whilst assessing the risks an IFI encounters in a murabaha transaction, the primary thing which comes into thoughts is what recourse does it have on the murabaha items or property in case of default with the aid of the purchaser in making timely payment to the IFI.

In conventional phrases and as described by means of basel ii, you may term it as the credit score risk however due to the fact that there's no room for credit in sharia, we'd permit ourselves to term it as default threat.
Earlier than discussing the mitigation to the default threat in murabaha, it's far essential to notice that not like traditional banks where any default in well timed payment of LATR or any other debt at the purchaser is greeted with 3 layers of interest normal, compound and penal, an IFI is barred by way of the sharia to enhance its murabaha amount even by means of a penny in case of default through the customer.
The cause for such restrict is that murabaha is not a transaction of loan with interest but a hard and fast fee sale agreement which can not be altered even supposing the customer fails to accomplish its financial duty towards the vendor.

Credit Card Process

A Credit card process can be defined as a customer or a client of a bank goes for the credit card acquisition application to bank for credit card process a relationship manager of a bank get the signed application of credit card from a customer and receives necessary documents for further credit card process credit card application then computerized by the bank but here are some banks they are offering online acquisition of credit card application for credit process and application goes to credit analyst for approval after approval credit application forward to credit disbursement and plastic card making department and then issued to customer at his or her signed address this credit card process been done by the bank.

When a customer receives the card and then wants to buy goods or services from any other retailer then he or her purchases goods or services, for payment a customer gives the credit card to the retailer he swipes the card from merchant machine and gives the bill to the customer. A merchant machine forwards the detail of the customer online to the bank this all over credit card process between a customer and a bank.

Debt Buyer

Whilst the  borrower has realised that it isn’t in all likelihood to payback, it will reduce its charges by means of promoting that debt to a debt client. Borrowers package collectively severa bills with similar capabilities and promote them as organization. Debt customers can pick out from programs of bills that are not that old and that no different collector has labored on yet, accounts that are pretty antique and that different creditors have failed to collect on, and bills that fall somewhere in between.

Debt shoppers regularly buy these applications through a bidding procedure, paying on average four cents for each $1 of debt face value. In other phrases, a debt purchaser may pay $40 to purchase a delinquent account where the stability owed is $1,000. The older the debt, the less it prices, considering that it's far much less likely to be collectable.

The kind of debt also affects the rate; loan debt is well worth extra, at the same time as software debt is well worth less. Debt consumers maintain the entirety they acquire; due to the fact they have purchased the debt from the borrower, they don’t send any of the amount gathered to that creditor.

Debt collectors receives a commission once they recover a delinquent debt; the more they get better, the greater they earn. Old debt that is past the statute of obstacles or is in any other case deemed uncollectable is bought for pennies on the dollar, making collectors huge income.