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Financing Facilities & Services

Working Capital


Murabaha

Bank Nizwa SME Murabaha Financing helps you meet the short-term financing needs of your business. Based on the Sharia concept of Murabaha, we purchase the goods you need, directly from the seller – and after we own it, we offer to sell the goods onwards to you on ‘cost-plus-profit’ basis. You make periodic instalment payments on the Murabaha sale price and, on maturity, the financing is settled.

The Purpose


The purpose of the Murabaha facility is to finance purchase of merchandise, machinery, vehicles, equipment, or raw materials. It is also commonly used for short-term trade financing, such as issuing and funding Letters of Credit for importers. A Murabaha Letter of Credit is issued for a beneficiary (exporter) on behalf of an applicant (importer).

Wakala Bil Istithmar

Wakala Bil Istithmar can be used by you as a short to medium and long-term working capital financing tool. The Bank, in its capacity as the Principal (the “Muwakkil”), appoints you as its Agent (the “Wakil”) to manage the investment amount in Sharia compliant activities that may be entered into, as agreed, by the Wakil on behalf of the Muwakkil.

The Purpose


The prime objective of making such an investment is to generate profit from the business activities and get the investment amount paid back along with the profit amount, if any, on the investment maturity date based on the anticipated profit rate. The investment will be in the client’s business based on the client’s balance sheet strength plus proven profitable operations and successful business track record.

Long Term Financing for Capex


Diminishing Musharaka

Under this mode of financing, both Bank and you contribute capital and agree to a profit-sharing ratio. Capital here does not necessarily refer to cash. It can also be capital-in-kind. This financing method is used for creation or purchase of Fixed Assets in the business. Once the asset is created or acquired, the share of the Bank in the asset is periodically bought back by you, thereby reducing the Bank’s share.

The Purpose


The purpose of Diminishing Musharaka facility is to finance acquisition of fixed assets such as buildings, vehicles, etc. and is commonly used by clients who want to own an asset but cannot afford to pay the full price. So they take the assistance of financing from the Bank, which eventually ends up with the complete ownership of the asset by the client.

Ijara

Ijara simply refers to a lease transaction. The Bank first buys the asset from a supplier, then leases it to you. Upon the expiry of the lease, the ownership of the asset is transferred to you.

The Purpose


The purpose of Ijara facility is for purchase of tangible assets such as real estate properties, vehicles, machinery, equipment, etc. as well as intangible assets, such as services. These specified assets are subsequently leased/rented for beneficial usage to clients for a period of time under the Ijara contract. During the Ijara period, the Bank retains the ownership of the assets/services until the Ijara period ends and the ownership is subsequently transferred to the client.

Istisna’a

Istisna’a is a contract of sale of specified items to be manufactured or constructed, with the obligation on the part of the manufacturer or contractors to deliver the items upon completion. This financing method can be catered to when the required items are still in-process or yet to be constructed.

The Purpose


The purpose of Istisna’a facility is to finance different kinds of projects such as housing, construction of a building, plant, highway, etc. It can also finance manufacturing of machines, equipment, and other similar items. It can also be used for export financing as well, and to meet working capital requirements in industries where sale orders are received in advance. However, Istisna´a cannot be used for natural things or products that are not manufactured, such as livestock and farm produce.

Trade Finance


Letters of Credit

Islamic Letters of Credit (L/C) are an undertaking by the Bank to make a payment to a named party against the presentation of the stipulated documents. Bank Nizwa can help you open L/Cs for your purchases, both sight and usance, as well as finance the LC for making payment to the supplier.

Bank Guarantees

A Sharia compliant Letter of Guarantee based on the concept of Kafala is a written undertaking issued by the Bank on your behalf to the beneficiary that meets your business needs.

It includes the following types:

  • Tender Guarantees
  • Advance Payment Guarantees
  • Performance Guarantees
  • Financial/Payment Guarantees
  • Retention Guarantees
  • Counter Guarantees

Foreign Exchange Services

Foreign Exchange, or Sarf, is a transaction in which one person buys an amount of a specific currency against an equivalent amount in another currency. At Bank Nizwa, we offer Spot and Forward (under Wa’ad contract) transactions for all major currencies.

Calculators