The Presidents/CEOs
All Islamic Banking Institutions (IBIs)

Dear Sirs,

Invoice of Murabaha Transactions

Please refer to Annexure -1 of IBD Circular No.2 of 2008 (Appendix-A- Essentials of Islamic Modes-Murabaha, sub clause vi) that requires IBIs to obtain invoices in the name of bank in Murabaha transactions. However, considering the practical difficulties in obtaining invoices, particularly, in transactions like purchase of phutti, raw hides, milk, sugarcane etc. the instructions on obtaining invoices have been reviewed and amended as under:

1. The invoice issued by the supplier shall be in the name of Bank- Account Client e.g. “1st Islamic Bank – ABC Company”. In case where obtaining invoice in the name of IBI is not possible, the invoice in the name of client may also be acceptable, subject to specific approval of the Shariah Advisor, for all such transactions.
2. In transaction where obtaining formal invoice either in the name of bank or the client is not possible, then the document or combination of documents like Truck Receipts, Delivery Note, Goods Received Notes, Physical Inspection Report, Kachi Parchi, Inward Gate Pass etc having particulars (i.e. names of buyer & seller, date of purchase/delivery, description of goods, quantity and purchase amount etc.) may be accepted in lieu of invoice with the approval of Shariah Advisor.
3. The Shariah Advisor while approving any transactions as mentioned in Para (i), (ii) above, shall document the reasons/industry norms etc. due to which obtaining invoice and/or making payment directly to the supplier is not possible. He shall also review and approve the process flows etc to be adopted by the client/IBI to execute such transactions. The Shariah Advisors shall also, either themselves or through suitably trained staff of the IBIs, make onsite verifications of such transactions on sample basis.
4. The payment for Murabaha transactions shall either be made directly to supplier or credited in an escrow account by the IBIs. However, in cases where direct payment to supplier is not possible due to genuine reasons, the payment to the supplier may be made through the agent subject to explicitly recording the reasons and approval of process flow etc of all such transactions by the Shariah Advisor.

Further with the issuance of the above instructions the IBD Circular No. 04 dated November 15, 2008 will stand repealed.
Please acknowledge receipt.