DIMINISHING MUSHARAKAH FINANCING FOR PLANT / MACHINERY / EQUIPMENT / FACTORY BUILDING: 

Diminishing Musharakah is a Shirkah (partnership) based transaction through which Dawood Islamic Bank Limited (“DIBL”) and its customer contribute their equity at an agreed ratio for the purchase of equipment/machinery and other tangible assets.

Diminishing Musharakah at a glance:

Request from the customer to DIBL for the purchase of specific equipment/machinery. DIBL and the customer jointly contribute their share of equity at an agreed ratio to purchase the equipment/machinery by executing a Diminishing Musharakah Agreement. DIBL's share is divided into monetary units subject to purchase by its customer periodically until such time that the sole ownership of equipment/machinery is transferred in the name of the customer. Besides purchase of DIBL’s equity periodically, the customer utilizes the usufructs/benefits of the equipment/machinery and pays agreed consideration to DIBL, periodically.

As continuing security for the obligations of the customer, the following documents shall be executed between DIBL and the customer:

• Diminishing Musharakah Agreement.
• Agreement for Periodical Payment (Monthly/Quarterly/Semi-Annually).
• Undertaking to Purchase the Musharakah Units.
• Authority letter to be executed by customer in favor of DIBL to make an offer by the client to sell the ownership in property subject to Sale & Purchase Back Diminishing Musharakah.

The customer shall create a charge over the equipment/machinery in favor of DIBL.

All agreements/documents are approved by DIBL’s Shari’ah Advisor.