the crisis of modernisation and islamicisation 333that may extend to ten years for loans of 30 years maturity. The
main purpose of these loans is to provide a long-term finance for
projects that are expected to have a significant socio-economic impact
and which are not of the revenue generating type. They are most
suitable for infrastructure projects.
Leasing. This is used to finance capital equipment and other fixed
assets in income generating projects. As in leasing in general, the
ownership of the assets is transferred to the leasee (the beneficiary)
at the end of the lease period. With a gestation period that may
ranges between six and 48 months, the lease period may extend to
15 years. The lease payment (rental) is set so as to provide an aver-
age rate of return to the Bank of about 6% per annum. To safe-
guard the interest of the Bank, the lease is provided subject to
government or bank guarantee.
Installment Sale. In this mode of finance the Bank buys the equipment,
which is mainly capital assets, and sells and delivers them to the
beneficiary in installments. The overall installment period can reach
15 years, and the average rate of return to the Bank from install-
ment sale is about 6% per annum.
Istisna"a. Istisna"a involves a contract whereby the Bank undertakes
to have specific equipment manufactured at the specifications required
by the beneficiary and to sell these to the beneficiary at a price to
be paid over an agreed period. The period may not exceed 15 years.
The return to the Bank is about 6%.
Equity participation. The maximum participation of the Bank is one
third of the business’ capital. Needless to say, the business has to be
run in accordance with the Sharì"ah.
Profit sharing. It is a form of partnership between the Bank and
entrepreneurs where the profit is divided in agreed upon proportions
between the Bank and the partners.
Lines of finance. These are standard lines of finance to the national
development financing institutions (NDFI) and Islamic banks for the
financing of small to medium-size enterprises. The period of financing
is normally shorter than the period in the above modes of finance.
The rate of return remains at about 6%.
Technical assistance. This, which is for financing pre-investment
expenditure, such as research and development, takes the form of