Guidelines for Islamic Modes of Finance  

Press Release

April 15, 2005 


State Bank’s Shariah Board Approves
Essentials and Model Agreements for
Islamic Modes of Financing

Essentials of Islamic Modes of Financing
Murabaha Facility Agreement
Musawamah Facility Agreement
Lease Agreement
Salam Agreement
Musharaka Investment Agreement
Istisna Agreement
Agreement for Interest free Loan
Mudaraba Financing Agreement
Syndication Mudaraba Agreement
Agreement For Interest Free Loan

is made at _________________ this ___________________ day of ________________ 2001.


_____________________________________ Limited, having its place of business at / resident of _______________________________ hereinafter referred to as “the Client” (which term shall wherever the context so requires or permits mean and include its successors-in-interest and assigns) of the ONE PART.


__________________________________ Bank Limited (or financial institution), a duly incorporated banking company (or financial institution) having its registered office at ___________________ hereinafter referred as “the Institution” (which expression shall wherever the context so requires or permits mean and include the heirs, legal representatives and successors-in-interest and assigns) of the OTHER PART.

WHEREAS the Institution has agreed to give an Interest Free Loan to the Client on terms and conditions hereinafter appearing.


1. The Institution hereby agrees to provide to the Client an Interest Free Loan (hereinafter referred to as “the Loan”) upto a maximum of Rs. ___________________ on the terms and conditions hereinafter contained.

2. The parties hereto hereby mutually agree and covenant as under:-

i. The Client undertake to repay the loan without any interest on or before ______________ .

ii. In case the Client fails to perform as per provisions of this Agreement or any amount is required to be paid by the Client on a specified date and is not paid on that date, or any amount is payable by the Client under this Agreement within a specified period after the receipt of a demand from the Institution and is not paid by it within the specified period after the receipt of the demand and such amounts have to be recovered through litigation, a court may award solatium to the Institution to cover the expenses incurred in the recovery of its dues.

3. As security for repayment of the Institution’s loan and/or all other sums payable as aforesaid the Client hereby agrees and undertake to give such security as may be acceptable to the Institution and the terms and conditions of which shall be such as the Institution may determine.

IN WITNESS WHEREOF the Client and the Institution have executed this agreement on the day, month and year hereinabove mentioned.

Witness    CLIENT
1. ________________________   ________________________
2. ________________________    

1. ________________________   ________________________
2. ________________________    

Appendix A
Description of the Project

Appendix B
Schedule for Purchase of Project Shares

Appendix C
Cost/Value of the Project



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