Istisna (Manufacturing Finance)
Contract to fund goods/projects under construction, with payment over time.
Detailed Description
Istisna (Manufacturing Finance)
What is the primary purpose of an Istisna contract?
The primary purpose of an Istisna contract is to facilitate the manufacturing and production of goods in a manner compliant with Islamic finance principles.
How does Istisna differ from Murabaha?
Istisna differs from Murabaha as it focuses on the manufacturing process and production of goods that may not yet exist, while Murabaha involves the sale of goods at a marked-up price.
What are some common applications of Istisna?
Istisna is commonly applied in sectors like construction, manufacturing, and infrastructure development for projects such as buildings, roads, and industrial equipment.
What challenges might arise in an Istisna contract?
Challenges in an Istisna contract may include production delays, fluctuations in material costs, and ensuring compliance with Shariah principles.
Why is the regulatory framework important for Istisna contracts?
The regulatory framework is important for Istisna contracts to ensure adherence to Islamic principles, protect the rights of both parties, and promote transparency in transactions.