Product Musharaka

Sharing of Goods and Promise to Purchase

The Bank may participate, with one partner or more, in the purchase of a specified commodity with a capital defined prior to signing the participation contract. The partner/ partners shall sign a separate contract promising to buy the Banks' share in Murabaha formula.

Areas of Application of This Product:
This product can be applied on a variety of commodities and goods including vehicles, machinery, equipment and factories. It also applies for personal purposes, commercial and productive. This is done via the participation of the Bank with its clients from all segments, either individuals, companies, establishments or the other public agencies, whereby these parties own only a part of the liquidity needed for the asset. The Bank thus enter as a partner in the transaction which ultimately ends by selling its share in the asset via Murabaha formula to the partner/ partners after the two parties own together the asset concerned.

Executive Procedures and Practical Steps for Implementing the Product:
For owners of small and medium enterprises, and large companies.
  • First Stage:
    1. The client must be a holder of a current account at the branch.
    2. The client shall sign the participation application with the promise to buy the Bank's share.
    3. The provision of all legal documents of the client.
    4. The provision of a feasibility study on the commodity from one of the accredited offices by the Central Bank of Libya.
    5. The provision of a first- grade mortgage equivalent to 100 percent of the debt value (the share) for projects amounting to more than (40,000,000 LYD).
    6. In the event the participation does not exceed the amount of (40,000,000 LYD), the client shall introduce two guarantors from the public sector whose salaries are regularly transferred to the Bank.
  • Second Stage:
    1. Signing the participation contract by the two parties (the Bank and the Partner).
    2. Depositing the capital value (the shares of partners) in the account allocated for the transaction according to the prior agreed ratios.
  • Third Stage:
    1. Buying the commodity from the source and owning it by the two parties.
  • Fourth Stage:
    1. The partner shall submit an application citing his wish to buy the Bank's share.
    2. Signing the contract to sell the Bank's share to the partner according to Murabaha formula.
    3. Signing the prior agreed guarantees for the favor of the Bank.
    4. The partner shall sign the document affirming he received the participation commodity.
    5. The settlement of the accounts concerning the partnership and proof of profit or loss.
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