Bank islami Free interest loan Apply Online- The MUSKUN Home financing facility offered by the bank operates on the principle of Diminishing Musharakah and Ijarah. This financing arrangement involves both you and the bank participating in the ownership of a property.
Bank islami Free Loan
In the Diminishing Musharakah transaction, you and the bank become co-owners of the property based on the concept of Shirkat-ul-Milk (joint ownership). The bank’s share of the property is then leased to you through an Ijarah agreement, which divides the property into units.
As per the agreement, you agree to gradually purchase the bank’s units over time, thereby increasing your ownership stake in the property. Eventually, when you have acquired all the units previously owned by the bank, you become the sole owner of the property.
During the period in which you are acquiring ownership, you pay rent to the bank for the units that are leased to you. However, as your ownership in the property increases, the rent amount decreases, reflecting the decreasing share of the bank in the property.
This structure allows you to gradually become the sole owner of the property while making rental payments to the bank for the units leased to you. It aligns with the principles of Islamic finance, where interest-free arrangements and shared ownership are emphasized.
Diminishing Musharakah: In Diminishing Musharakah, the financing arrangement is based on shared ownership between the customer and the bank. The customer gradually buys out the bank’s share in the property or asset over time through periodic payments. As the customer’s ownership increases, the bank’s ownership decreases. This arrangement aligns with Islamic principles and does not involve interest.
Conventional Long-Term Financing: Conventional long-term financing typically involves a borrower obtaining a loan from a bank or financial institution. The borrower is required to pay back the loan amount along with interest over a predetermined period of time. The borrower’s ownership of the property or asset is not shared with the bank, and the borrower assumes full ownership from the outset.
The key differences between Diminishing Musharakah and conventional long-term financing lie in the ownership structure, payment mechanisms, and adherence to Islamic principles. Diminishing Musharakah offers shared ownership and gradually diminishing payments, while conventional long-term financing involves a borrower-creditor relationship with fixed payments including interest.
For a more detailed understanding, I recommend referring to reliable Islamic finance resources or consulting with financial experts knowledgeable in Islamic financing principles.
How it works
When seeking financing from BankIslami for purposes such as home purchase, construction, renovation, or balance transfer, the following steps are typically involved:
Express your financing needs for the desired purpose, whether it’s a home purchase, construction, renovation, or balance transfer.
Submit Application Form
Complete the application form provided by the bank and attach the required documents. Additionally, submit a cheque for the processing fee. A business executive from the bank will guide you throughout the process.
The bank will conduct verification of your residence and office addresses, as well as the references provided by you.
The bank will estimate your income to determine the maximum financing amount that can be provided to you. If you are self-employed, the bank’s agent will approach you for the necessary income details and documents. If you are a salaried individual, the bank will approach your employer for income verification.
Legal Opinion and Property Valuation
The bank will obtain a legal opinion on the property documents submitted by you. Additionally, a valuation of the property will be conducted to determine its market value.
Offer Letter: Once the evaluation is completed, the bank will issue an offer letter specifying the financing amount you qualify for based on the evaluation.
Shirkat-ul-Milk (Musharaka) Agreement
Upon your acceptance of the offer, a Shirkat-ul-Milk (Musharaka) Agreement will be signed between you and the bank. This agreement establishes a joint ownership (partnership) between you and the bank in the financed property.
Payment and Property Transfer
In the case of a MUSKUN Home purchase, the bank will issue a Pay Order in the name of the seller. Bank representatives, along with an in-house or external lawyer, will accompany you for the property transfer process. For other purposes like construction, renovation, or replacement, the financing amount will be credited to your account, and Shariah-compliance checks will ensure proper utilization of funds.
Monthly Payment Agreement
Both you and the bank will execute a Monthly Payment Agreement, wherein you agree to make monthly payments to the bank for the use of the bank’s ownership in the home.
Undertaking to Purchase
You will provide an undertaking to purchase Musharakah Units representing the bank’s undivided ownership share in the property from the bank periodically.
Purchase of Musharakah Units
On a monthly basis, you will purchase Musharakah units from the bank. As you purchase all the units previously owned by the bank, you will become the sole owner of the property with a free and clear title to your home.
It is important to note that these steps may vary based on individual circumstances and specific terms and conditions set by Bank Islami.
Here is a list of the required documents for different categories of applicants when applying for financing from BankIslami for a home purchase:
Copy of CNIC (Applicant and Co-applicant)
2 passport size photographs (Applicant and Co-applicant)
Copy of chain of all title documents
Approved building plan
For Salaried Persons:
Employment certificate issued by employer
Last three Salary Slips
Bank Statement of last 12 months
Income tax return for last three years
Proprietorship Letter/Partnership deed/Memorandum and Articles of Association
Company Bank Statement of last 12 months
For NRPs (Non-Resident Pakistanis):
Last three months Salary Slip
Copy of Passport
Copy of NICOP (National Identity Card for Overseas Pakistanis)
VISA/residential status proof
Tax deduction details
Employment Certificate and Contract Copy
Bank Letter and Bank Statement of last 12 months
2 passport-sized colored Photographs of Applicant/Co-Applicant
Additionally, please note the following criteria:
The primary applicant’s age limit is 25-65 years (for salaried/businessmen/selected professionals), and 25-60 years for NRPs.
Co-applicant’s age limit is 21-70 years.
Salaried applicants require a minimum of 6 months at their current employment and 2 years of continuous employment experience in the same industry/field.
Businessmen need to provide 3 years of business/practice records.
The minimum income requirement is Rs. 60,000/- for salaried individuals and Rs. 80,000/- for NRPs (with the respective foreign currency equivalent).
Please ensure that all documents relating to NRPs are duly attested by the Pakistani Consulate.
How TO Apply
Bank Islami’s Investment Banking division is a valuable franchise that offers authentic, Shariah-compliant, and innovative products and services to corporate clients. The division focuses on fulfilling their needs in areas such as Syndications & Capital Market Transactions (Sukuk/Islamic Commercial Papers), Project & Structured Financing, and Equity & Advisory services.
The team at Bank Islami Investment Banking comprises transaction managers and associates with extensive knowledge and expertise in their respective fields. They work closely with corporate clients to structure tailored deals that meet their specific requirements. These deals can range from short-term to long-term syndicated transactions, capital raising through Islamic instruments like Sukuk and Islamic Commercial Paper, and equity offerings or project & structured financing.
What sets Bank Islami Investment Banking apart from others are the following factors:
Commitment to Excellence:
The team strives to provide best-in-class advice and execution for complex transactions across various products, helping clients achieve their growth objectives.
The division focuses on being a significant financier and provider of capital-raising services, enabling clients to achieve their strategic goals.
The team comprises professionals with diversified work experience in areas such as Corporate Finance, Project Finance, Research, Financial & Advisory. They provide independent advice without any conflicts of interest.
Distribution and Placement Capabilities: BankIslami Investment Banking has strong distribution and placement capabilities with access to a pool of investors and financial market players, including Asset Management Companies, Mutual Funds, Banks, DFIs (Development Financial Institutions), and NBFIs (Non-Banking Financial Institutions).
BankIslami Investment Banking has a track record of successfully advising and arranging the highest number of Islamic Commercial Paper (ICP) issues for corporate clients, with a cumulative face value exceeding Rs. 60 Billion.
Overall, BankIslami Investment Banking strives to provide comprehensive financial solutions and advisory services to corporate clients, leveraging its expertise and market leadership in Shariah-compliant investment banking.