First Punjab Modaraba

First Punjab Modaraba

A Wholly-Owned Subsidary of The Bank of Punjab
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First Punjab Modaraba

Our Core Business Services

First Punjab Modaraba has the ability to offer comprehensive tailor-made solutions to its clients

Musharakah (Partnership Financing)

Musharakah is a Shariah-compliant partnership arrangement in which the financier and the customer jointly contribute capital to a business or investment. Profits are shared according to a pre-agreed ratio, while losses are shared in proportion to each party's capital contribution. This mode of financing promotes risk-sharing, transparency, and mutual participation in business growth.

Mudarabah (Trust Financing)

Mudarabah is a Shariah-compliant investment partnership where one party provides the capital (Rab-ul-Maal) and the other provides expertise and management (Mudarib). Profits are distributed according to a mutually agreed ratio, while financial losses are borne by the capital provider unless caused by negligence, misconduct, or breach of contract by the Mudarib. This arrangement encourages entrepreneurship and ethical investment.

Murabaha (Cost-Plus Financing)

Murabaha is a Shariah-compliant financing arrangement in which the Modaraba purchases an asset requested by the customer and sells it to the customer at an agreed cost plus a disclosed profit margin. The customer repays the amount through installments or as agreed. Murabaha is commonly used for trade finance, inventory purchases, machinery, vehicles, and other business assets.

Ijarah (Islamic Leasing)

Ijarah is a Shariah-compliant leasing solution in which the Modaraba purchases an asset and leases it to the customer for an agreed rental over a specified period. Ownership of the asset remains with the Modaraba during the lease term, while the customer enjoys its use. Ijarah is widely used for financing vehicles, machinery, equipment, and commercial assets.

Diminishing Musharakah (Declining Partnership)

Diminishing Musharakah is a Shariah-compliant financing structure where the Modaraba and the customer jointly own an asset. Over time, the customer gradually purchases the Modaraba's share through periodic payments while also paying rent for the portion still owned by the Modaraba. As the customer's ownership increases, the Modaraba's share decreases until the customer becomes the sole owner. This mode is commonly used for property, commercial, and asset financing.

Bay' Salam (Forward Sale Financing)

Bay' Salam is a Shariah-compliant financing arrangement in which the buyer pays the full purchase price in advance for goods that will be delivered at a specified future date. The quantity, quality, price, and delivery schedule are agreed upon at the time of the contract. Bay' Salam is commonly used to provide working capital to farmers, manufacturers, and producers while ensuring certainty and transparency for both parties.

Gharar (Excessive Uncertainty)

Gharar refers to excessive uncertainty, ambiguity, or risk in the terms or subject matter of a contract. Under Shariah principles, transactions involving significant uncertainty regarding the price, quantity, quality, ownership, or delivery of an asset are prohibited, as they may lead to injustice or disputes. Islamic finance promotes contracts that are transparent, fair, and based on clearly defined rights and obligations.

Musawamah (Negotiated Sale)

Musawamah is a Shariah-compliant sale contract in which the seller and buyer negotiate the selling price of an asset without the seller being required to disclose its original cost or profit margin. Once both parties mutually agree on the price and terms, the sale is concluded. Musawamah is commonly used in commercial trading where pricing is determined through negotiation and mutual consent.

Note: Unlike the others, Gharar is not a financing service or product. It is a fundamental Shariah principle that prohibits excessive uncertainty in contracts. 

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