Use of Funds

The uses of funds, namely, the types of financial instruments offered by the bank to generate revenues. The most common feature of any Islamic commercial bank involves two main sectors, namely, the personal or retail sector and the corporate or trade sector. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Retail Financing

The most common models and structures in Islamic home financing as offered by many Islamic banks worldwide are either based on bay’ bithaman ajil (deferred payment sale), musharakah mutanaqisah (diminishing partnership), ijarah (leasing), or parallel istisna’ (construction-required sale). For further details see: ISRA, Islamic Financial System; Principles and Operations.

Real estate finance for building and purchasing houses
A House-Buyer Approaches an Islamic Bank Seeking to Cancel an Existing Contract in Order to Enter into a MurÉbaÍah Sale with the Bank
Can a Murabahah Deal for Real Estate Be Structured When the Purchase Undertaker Buys Half Up-Front Using Conventional Financing & Asks the Islamic Bank to Buy the Other Half?
Is It Allowed to Sell the Item Made through an Istisna‘ Contract before Its Completion?
What is the Price to be Written in the Contract of Murabaha?
Is it a Must from a Shariah Point of View to Know about The Origin of the Customer’s Money?
Is it Allowed to Contract on a Commodity with a Customer that is Binding to Another Party?
Is it Allowed to Contract a Murabahah whereby the Customer Has Paid an Amount to the owner of the Asset?
Is it Allowed for KFH to Ask for Compensation for Terminating the Contract of Sale?
Is it Allowed for Purchase a House in Order to Pay off the Debt owed by a Customer of KFH Department?
Is it Allowed to Purchase a Mortgaged Asset and Resell it to the Son of the Original Owner?
Is it Allowed to Purchase a Land upon which Villas are Being Constructed and Re-Sell The Land alone to Customers?
Is It Allowed to Terminate the Contract of BBA That Began To Give Effects of Ownership to Enter in a New BBA with the Same Customer?
What’s the Ruling on Risk Management of Housing Loans?
What’s the Fatwa Committee’s Opinion Regarding the Issuance of takaful Insurance for the Customers of ijarah muntahiyah bi al-tamlik?
Application of Ijarah Mawsufah fi al-Zimmah Concept in Financing for House under Construction Based on Musyarakah Mutanaqisah
Ibra’ in Home Financing Product Linked to a Wadi`ah or Mudarabah Deposit Account
Financing Product for House under Construction Based on Istisna` Muwazi, Ijarah Mawsufah fi al-Zimmah and Ijarah Muntahia bi al-Tamlik
What’s the Shariah Opinion Regarding Building Villas by KFH on a Land Owned by the Bank in Order to Be Sold to Customers Through Difference Methods?
The Condition of Delay Penalty in Murabahah Transactions
Cancellation in Order to Enter into Executed Transactions on Murabahah Basis
Stipulation to Repurchase Asset in Bai` `Inah Contract

In automobile financing, the most popular structure used by many IFIs is al-ijarah thumma al-bay’ (AITAB) or simply known as the Islamic hire purchase. Some jurisdictions use different terms such as ijarah wa iqtina or ijarah muntahiyah bittamlik which generally implies that the transaction is underlined by a leasing contract (ijarah) and ends with the transfer of ownership to the customer upon completion of the financing tenure. For further details see: ISRA, Islamic Financial System; Principles and Operations.

Can a False Statement Be Made to the Authorities to Facilitate Tawarruq?
Using Cars as the Commodity in Tawarruq
تمويل شراء السيارات بنظام المرابحة
Is It Permissible If KFH Buys Cars for the Seller to Stipulate in the Same Contract That KFH Should Rent These Cars to Him?
Is It Permissible for KFH to Buy Cars from a Commercial Auto Agency Providing That the Manufacturer’s Agent Stipulates in the Contract that the Cars Shall Not Be Displayed at KFH’s Auto Showroom?
What Are the SharÊÑah-Compliant Procedures for Exchanging the Used Car of a Customer Who Wants to Buy a New Car from KFH?
Charging a Fee to Change the Name on the Promissory Note for a Car
A Stipulation That Doesn’t Impede the Legal Implication of the Deal
Can a Bank Choose to Execute a Sale at a Negotiated Price Rather Than Cost Plus Markup?
Can a Seller of Goods by Delayed Payment Buy Some of Them Back from the Buyer by Cash Payment?
Is It Permissible for KFH to Charge a Certain Fee to the Customer for Changing His Name in the Promissory Note to the Name of a New Buyer He Sold the Commodity to?
Is It Permissible for KFH to Enter into a Sale Contract with a Party Who Stipulates That KFH Should Not Sell the Commodity It Purchases to Other Whole Sale Companies?
Does the Customer Who Purchased a Car Have a Right to Benefit from the Discount Given to KFH After Completion of the MurÉbaÍah Deal with Him?
Is It Permissible to Finance a Deal in Which There Exist a Suspicion of Bay’ Inah?
Is It Permissible for KFH to Sell Goods on the Basis of Murabahah to a Company That Will Resell the Goods on Installments and Will Stipulate an Interest Payment in Case of Delay?
Is It Permissible in a Murabahah Contract for the Buyer to Receive the Commodity from the Source After Getting the Initial Approval from KFH?
Is It Allowed to Buy Cars from an Agent on the Condition That the Agent Will Extend a Guarantee to Buyers for Possible Defects and Be Financially Responsible for the Buyers?
A Prospective Customer Has Already Made a Down Payment to the Supplier
Resolution No. 120: Putting the name of the Corporation in newspaper ads along with the names of agencies selling cars by installments
Resolution No. 123: A client’s commitment to pay his brother’s debts
Resolution No. 151: the Corporation appointing the purchaser as an agent to determine and receive what he will eventually buy
Can a Discount be Claimed for Early Payment in a Delayed Payment Sale?
Charging a Fee for Annulling a Sale or Transferring Registration of Ownership
Contractual Agreements Prevent the Intermediate Murabahah Seller from Buying the Good at the Cheapest Available Price
Murabahah Contract: Restrictions On Selling
The First Seller Demands Earnest Money from the Purchase Undertaker
The Purchase Undertaker by Deferred Payment Wants to Sell the Good before Completing the Payments
What Is to Be Done in Murabahah about Anomalies in Delivery of the Subject of the Sale?
Commissions on Third-Party Insurance Policies
If the Bank Drops the Outstanding Balance Due on a Car Destroyed in a Traffic Accident, Does the Buyer Have a Right to Ask for the Insurance Compensation?
Buying from a Subsidiary and Selling to the Parent Company
Trading in a Used Car for a New One by Selling the Used Car to a Third Party Who Transfers the Payment to the New Car Seller
The Seller Stipulates That the Buyer Lease Back the Purchased Item to the Seller
The Bank Acts as the Car Dealer’s Agent for Collecting Installment Payments from Customers with Accounts at the Bank
Selling to Someone Who Will Resell Using Interest-Based Contracts
Selling to Someone Who Will Resell by Charging Interest
One Department of the Bank Buys a Commodity in Cash from a Customer Who Bought it by Deferred Payment from Another Department of the Bank
Discovering after the Sale that the Seller Was the Agent of the Real Owner
The Buyer Intends to Resell the Goods; Can the Buyer Stipulate a Discounted Price on Any Unsold Items in Case the Seller Lowers His Prices?
What is the Ruling on Selling Cars to a Usurious Institution?
Can One Pay Money to Participate in a Raffle?
Can an Islamic Bank Give a Credit Card as a Prize to Murabahah Buyers and Add the Cost of the Card to the Murabahah Base Price?
Can the Customer of a MurÉbaÍah Car Sale Use the Trade-In Price of His Old Car as the Down Payment for the New Car?
Can Earnest Money Be Paid before the Contract?
One Party Buys a Truck; the Other Drives It for Monthly Expenses Plus a Share of the Profit after the Owner has Recovered the Price of the Truck
Can a Dealer Buy Back Cars from Customers and Pay the Bank the Outstanding Balances, on the Condition that the Customers Buy New Cars from the Dealer?
If a Customer Cancels the Sale of His Used Car to the Bank after the Title Has Been Transferred, and the Bank Allows It, Can the Bank Charge Him for the Inspection Expenses It Incurred?
Can the Bank Buy a Car That Was Purchased by Its Appraiser?
Can a Car Dealer Charge the Bank a Commission for Referring a Prospective Buyer to the Bank?
How to Deal With an Exchange Discrepancy in a Canceled Sale That Involved Different Currencies?
Is Hire-Purchase of a Car Lawful at a Nominal Final Selling Price?
What is the Ruling on a Lease Agreement That Culminates in Ownership?
Is It Allowed To Give the Leased Car to the Lessee or Sell It to Him for a Nominal Price at the End of the Lease Contract?
Is It Allowed To Require the Lessee To Get Comprehensive Insurance for the Car and Assign the Lessor as the Policy’s Beneficiary?
Is It Allowed to Sell a Share of Common Property That Has Been Leased Out?
Is It Allowed for a Partner in a Deferred Payment Sale to Sell Its Share to a New Partner?
Is It Allowed for a Partner to Sell Commodities to Other Partners?
Is it allowed to sell a car to a customer and to keep the car registered in the Bank’s name as a security for the payment of the due installments?
Is it allowed for a company owned by the bank in the USA to sell a car to a customer who borrows the car’s price from a bank on interest?
Is it Allowed for a company owned by KFH in Germany that sells cars in cash to investment companies that, after acquiring ownership of the cars, sell or lease them to individuals or companies?
What Is the Shariah Ruling if the option of Annul Is Stipulated only for one Parte?
Is Good Inspection Obligatory in Both Musawama and Murabaha Contracts?
Is it Allowed for a Customer to Replace a Good that He Purchased with another?
What is the criterion for cancelation of the initial agreement in the Murabahah transaction between the customer and the supplier or the car dealer?
Is it permissible to use vehicles owned and possessed by a company and registered under the name of another due to some laws?
Is it permissible to give an unconditional rebate to Murabahah costomers?
What is the opinion on KFH Malaysia’s Automobile Departments Products?
Does the presence of a lessee in the building prevent leasing it through ijarah muntahiyah bi al-tamlik?
Is it allowed for a house owner to take an amount of money from the purchase undertaker as an assurance of the latter’s seriousness?
Assignment of Liabilities in al-Ijarah thumma al-Bai`
Deposit Payment in Islamic Hire Purchase
Is it Allowed for KFH to Purchase Trucks Owned by a Party and Registered in Another’s Name for Procedural Reasons and Then Sell Them to the Latter Party Through a Murabahah Documentary Credit?
What's the Shariah Opinion Regarding the Purchase of Vehicles from Suppliers in Order to be Sold to Clients on the Basis of Murabahah?
What's the Shariah Opinion Regarding the Purchase of Lorries in Order to Be Run by Another Party?
What's the Shariah Opinion Regarding the Financing of Vehicles and Houseshold Equipments?
Is it a Condition in a Vehicle Financing Based on Murabahah to the Purchase Order that the Vehicle Must Be Registered Under the Bank Name Before the Execution of the Contract?
Is It Allowed for KFH to Authorize an Exclusive Car Dealer to Purchase Automobiles on KFH’s Behalf and then the Agent Sells them to Itself?
Is it Allowed for KFH after Selling a Car to a Customer to Transfer it by Way of One of the Local Banks to Be Paid for in Installments?
What’s the Shariah Opinion Regarding the Required Changes to the Contract Titled ‘Contract for Vehicle Use with a Bilateral Promise of Ownership Transfer’?
Buying and Selling of a Commodity Already Sold Under Murabaha Mode
The Price of a Commodity Bought by the Bank in Murabahah Transactions
Calculation of Profits on Insurance Service
Sale of the Commodity Subject Matter of the Contract
Profits from the Sale of Commodity Under the Contract
Eligibility of the Bank in Part of the Profit in the Event of the Cancellation of the Murabahah Transaction
شراء البنك سيارات وتأجيرها للبائع نفسه
شراء البنك سيارات تسجل باسمه وتقوم جهات أخرى بتشغيلها

Personal financing does not entail any asset acquisition. Rather, customers require cash or liquidity for various reasons and purposes such as education, medical, performing pilgrimage, marriage, payment of debt and others.

Microfinance is seen as a set of services that raises the prospects for low-income households, and some poor people, to achieve
their goals – in business, consumption, education, health and other areas – and not as a magic bullet that automatically lifts poor people out of poverty through microenterprise. For further details see: MICROFINANCE: A Reader

What’s the Fatwa Committee’s Opinion Regarding the Cooperative Marketing Contract and the Handling of the Returned and Damaged Goods?
Shariah Concept for the Operation of Islamic Guarantee Facility by Credit Guarantee Corporation
تحديد سقف تمويلي لاستغلاله في تمويل صغار المهنيين بصيغة المرابحة

Corporate Financing

Revolving Credit: The facility of revolving credit allows the customer to utilise the funds up to a pre-approved credit limit. This is to ensure that the customer's business has that little bit extra during those short-term periods.

Commitment Fee on Unutilised Balance of Islamic Overdraft Facility or Revolving Credit

Financing to a Party Who Explicitly Performs Non-Shari`ah Compliant Activities


An Islamic Bank Has Multiple Accounts in Different Currencies with a Foreign Bank, Some Overdrawn and Some with Positive Balance
Is It Permissible for KFH to Issue a Statement for One of Its Customers Stating That He Has Such-And-Such Amount in His Account When He Does Not Actually Have That Balance?
Charging the Customer a Fee to Fix a Mistake Made by the Bank
The Bank Transfers Funds into a Client’s Account, Issues a Certificate That He Has That Amount in Available Funds, Then Withdraws What It Transferred
What Is to Be Done with Tellers’ Positive Discrepancies?
What Should Be Done with Small Cheques Issued to Accountholders Who Cannot Be Located or Contacted?
Buying Gold That Has Been Deposited with the Buyer
Can an Islamic Bank Buy a Company That Runs on Riba in Order to Change It?
Is It Permissible for KFH to Charge a Certain Fee to the Customer for Changing His Name in the Promissory Note to the Name of a New Buyer He Sold the Commodity to?
Is It Permissible to Sell a Specific Commodity to Someone for a Combination of Cash and Credit and to Calculate the Price on the Basis of All the Expenses?
Is It Permissible If the Producer Mistakenly Shipped the Commodity in the Name of the Customer Who Promised to Purchase It from KFH Which Ordered the Commodity in Its Name?
Can the Trade License Be Made Part of the Price When Selling a Business?
Is It Allowed to Sell a Government-Issued License to Undertake a Project?
Resolution No. 103: No permission to write any text on the back of a bill of exchange
Resolution No. 175: The impermissibility of the Corporation issuing the International Traveller Card (Iyābā)
اعتماد عمولة تغطية قيمة الحوالة وعمولة تنظيم تعهد قطع تصدير/ كتاب مسبق وعمولة تسديد تعهد
تحويل الأموال المجنبة من وحدة مصرفية إلى أخرى
دعم منظمة من الكسب غير المشروع
إمكانية مساهمة البنك في بعث صندوقين مشتركين للتوظيف
تحميل الوعاء العام مصاريف إصدار بطاقة التقسيط
كتابة الآيات القرآنية في دفتر الادخار
أرباح حساب الحج
أخذ البنك عمولة مقابل الخدمات المصرفية
تأمين البنك على أمواله وممتلكاته الخاصة
مخصصات معالجة الديون المشكوك في تحصيلها
Insurance Premium
Various Types of Banking Insurance
Islamic Financing Insured By Conventional Insurance
An Islamic Bank Has Multiple Accounts in Different Currencies with a Foreign Bank, Some Overdrawn and Some with Positive Balances
Stipulating that Customers not Deal with Competitors
Can a Customs Clearing Agent Charge Different Fees Based on the Value of the Goods?
Can an Islamic Institution Give a Non-Muslim Employee Leave to Celebrate His/Her Religious Holiday?
Can an Islamic Bank Use Photos That Include Women for Promotional Purposes?
What Is the Rule on Selling Cameras and Their Accessories?
Can the Employer Delay Payment of the Monthly Salary of an Employee under Probation?
Is the Ruling on an Employee Careless about Confidential Job-Related Information?
Is it Islamically Lawful for an Employer to Decline to Transfer the Work Permit of an Employee Who Resigns to Take a Better Offer?
Is It Allowed to Open an Account for a Minor Orphan with His Guardian Listed as His Father?
Can a Commercial Institution Distribute Cards in Mosques Containing Information about Its Activities?
Can 3-D Cartoon Characters Be Used in Displays Intended for Children?
Taking Bonds or Bills as Payment for Debts
Can Muslim Male Employees Work with a Non-Muslim Woman Who Does Not Dress According to Shari‘ah?
Can an Islamic Bank Accept Assignment of Rights Requested by Usurious Banks of Their Customers?
Issues Related to Point-of-Sale Service (KNET)
Are the Amounts Given to Employees for their Official Business Travel Considered Their Right?
Is It allowed to Sponsor Some Types of Sports?
What is the ruling on charging a nominal fee for withdrawing an investment deposit before the end of its period?
Is It Allowed to Finance Hotels that Provide Prohibited Services?
Is it Allowed to Sell for Undeclared Agent What he Bought as Agent?
What is the Shari‘ah Rulings in Transporting Money For a Sum of Money?
What is the Shari’ah compliant way to finance the exchange of vouchers?
Is it Permissible to Providing Internet Access to KFH’s Residential and Commercial Complexes?
What’s the Fatwa Committee’s Opinion Regarding Organization of the Business of Islamic Banks Issued by the Central Bank of Kuwait (CBK)?
Is it Allowed for KFH to Enter into a Contract with Debt Collection Agencies that Provide Gifts and Money in order to Collect the Owed Debts?
What’s the Fatwa Committee’s Opinion about the Participation in the February 2004 Shopping Festival?
Is it Allowed for KFH to Charge a Fee from Customers Who Withdraw their Financing Applications During the Promise Stage?
What’s the Fatwa Committee’s Opinion Regarding the Cooperative Marketing Contract and the Handling of the Returned and Damaged Goods?
Is it allowed for the Bank to insure its wealth and its exclusive properties?
Is it allowed for the Bank to insure its wealth and its exclusive properties?
Is it Allowed for KFH to Engage in the Establishment of a Company to Collect Financial Data on Banks’ Customers to Assess their Financial Standing?
What is the Ruling on the Application Form for Finance Facilities Where KFH Approves the Finance Limits and Letters of Guarantee Provided to its Customer?
What’s the Shariah Opinion Regarding Balances in the Claims Account That Have Been There for a Long Time Linked to Past Customers Who Cannot Be Reached?
What’s the Shariah Opinion Regarding Opening an Account with an Authorization from an Adult to a Minor to Utilize the Funds in the Account?
Is It Allowed for KFH to Organize a Lucky Draw for Customers in Which They Would Have to Answer Certain Questions Regarding KFH’s Products and Their Fiqh Characterizations?
Is It Permissible for KFH to Organize a Lucky Draw to Win Prizes Either in Cash on in Kind for Customers When They Use KFH Online Financial Services?
What Is the Ruling on Financing the Purchase of Jewelry (Gold and Gems)?
Is KFH Liable for Not Being Able to Trade in His Customer’s Pre-Invasion Kuwaiti Currency Notes Because KFH Was Late in Opening His Safe Deposit Box After the Liberation from Iraq?
What Is the Ruling on KFH Granting a Resigning Employee the Entire End-of-Service Remuneration?
What is the Ruling on Distributing Brochures Explaining Insurance Issues to Customers?
What’s the Shariah Committee’s Opinion on the Booklet Titled ‘Shariah Supervision in Islamic Banks’?
What Is the Ruling on Placing a Picture of a Man Handing Out a Bank Card or a Brochure in the Branch Offices?
Is It Allowed to Accept Instructions from Standing Payment Orders in Favor of Satellite Channel and MM Telcom from Customers?
Is It Allowed to Organize a Ramadan Festival That Include Activities Such as a Luck Draw and Fashion Show?
Is It Allowed to Import Internet Usage Cards for a Customer in a Cooperative Marketing Service?
What is the Ruling on Installing a Satellite Dish for a Residential Complex Based on Residents’ Request?
Is It Permissible for KFH to Issue a Brochure That Includes Pictures of Women Providing That It’s Just for the Women’s Section?
What’s the Shariah Opinion Regarding the Third Clause of the Supply Contract Used in Cooperative Marketing?
What Are the Parameters for Publishing Pictures of Women in the Magazine Wahat al-Muwazzaf Published by KFH?
Is It Allowed for the Organization Providing Training Courses for KFH’s Employees to Compensate the Shortage of Male Lecturers with Female Lecturers?
Is It Allowed for KFH’s Employees to Enjoy Discounts on Certain Products and Memberships in Clubs Since That KFH Has Joined the Kuwaiti Banking Association and Kuwaiti Banks Club?
What Is the Ruling on the Promotional Festival Intended for KFH’s Female Customers?
What Is the Ruling on Shooting a Movie Scene in One of KFH’s Branches?
Is It Allowed for KFH to Be the Sponsor of a Portion of a Time on a Music Channel?
What Is the Ruling on KFH Getting Involved in the Marketing Campaign Organized by MasterCard Worldwide Which Includes Offers to KFH’s MasterCard Cardholders During the European Cup?
What Is the Ruling on KFH Joining the Kuwait Banking Association?
Modes of Participation between Banks in the Murabahah Contracts

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