Finance Products

As part of our ongoing commitment to provide you with the right products, here at Al Rajhi Bank have developed a number of Islamic products that we are sure will be of interest to you.  Our products are always in accordance with both international standards and Sharia requirements:

Bai Al Ajel

Bai Al Ajel is a financing facility that provides cash to customers.  The process involves selling the goods or commodities to customers, who later appoint the bank as the agent to sell the same goods in the market.  The sale proceeds are then transferred to the customer.  Payment for this facility is on a deferred basis and they can be made to the bank in installments or in one lump sum.

Murabaha

Murabaha contracts allow customers to purchase raw materials, capital goods and other consumables from local and international markets.  These goods are first bought by Al Rajhi Bank for its account on orders of the customers by paying cash or through Letter of Credit (LCs) and then sold to the customers with a profit margin on a deferred payment basis.  Deferred payments can be made to the bank in installments or in one lump sum.

Musharaka

Musharaka functions like a limited partnership between Al Rajhi Bank and customers who need to import certain goods and equipment, but do not possess sufficient funds to do so.  In this type of transaction, the customer provides a portion of the funds and Al Rajhi Bank provides the remaining funds.  Al Rajhi Bank then issues LCs to import the goods.  When the goods arrive, there are three options available:

• Al Rajhi Bank sells its share in Musharaka to the customer in return for a cash payment or deferred basis at an agreed margin
• The customer sells his share to Al Rajhi Bank in return for a cash payment or deferred basis
• Both parties sell their shares in the market together

Istisnaa

This product is suitable for financing large real estate projects. Under Istisnaa, Al Rajhi Bank arranges to build an asset or plant (the project) in accordance with the specifications requested by the customer.  Upon completion, the asset will be delivered to the customer against deferred payment of the sale price.

Ijara (Fixed or Floating)

Ijara is a type of financial lease where Al Rajhi Bank would acquire certain assets or equipment and then lease the equipment back to customers for payment of rentals (fixed or floating) on monthly or half-yearly basis.  At the end of the lease period, the ownership of the asset will be transferred to the customer upon payment of all dues.