Diminishing Musharakah (Home Finance)
ICFAL has developed a unique model which takes into account the real market value of rental and growth (instead of converting financial market interest (or Riba) into
When used in home financing however, Diminishing Musharakah can be viewed as a form of shared ownership with a leasing sale-back arrangement, which makes it different from an interest-based mortgage. Diminishing Musharakah arrangements allow equity participation and sharing of profits on a pro-rata basis, they also provide a method through which the co-operative keeps on reducing its equity in an asset against periodical payments, ultimately transferring ownership of the asset to the client. The product documentation and structure was approved by Pakistan’s Meezan Bank Limited in 2017
Murabaha (Car Finance)
Murabaha financing may be utilized for the purchase of small products wherein the member pays in pre-agreed instalments. In this structure, an intermediary buys a property with free and clear title. Murabaha is not an interest-bearing loan, which is considered riba (or excess), and is an acceptable form of credit sale under Islamic guidelines.