Istisna
Istisna is a Shariah-compliant sale contract used for financing the manufacture or construction of assets that do not exist at the time of the contract. It is not a lending contract, and the manufacturer/seller bears the risk of manufacture until delivery. Under Istisna, one party undertakes to manufacture, construct, or produce a specified asset in accordance with agreed specifications and to deliver it on a future date for an agreed price.
A short-term financing facility for meeting the liquidity requirements of the customer. Used commonly in project financing, infrastructure, and asset manufacturing.
Core Shariah Requirements:
- Clearly identifiable subject matter.
- Detailed specifications (quality, quantity, design, materials).
- Fixed price agreed at inception; no linkage to interest, inflation, or uncertainty; defined delivery timeline.
- Applicable only to assets manufactured or constructed (not readily available commodities).
- Contract becomes binding once manufacturing begins.
- No unilateral cancellation after commencement; termination only by mutual consent.
