Diminishing Musharaka

A form of partnership (shirkat-ul-melk) where PKIC-IFD and the Customer jointly acquired a new asset. Then PKIC-IFD further divided its owned share into a number of units. The customer will take on lease the PKIC-IFD’s owned units and also undertakes to periodically buy PKIC-IFD’s units, thus diminishing PKIC’s share till all units of the PKIC-IFD are purchased by him so as to make him the sole owner of the asset.

Business Need

• House Financing
• Plant and Machinery Financing
• Securitization/ Sukuk
• Consortium financing

Essential Shariah Requirements

• The subject of sale must exist at the time of sale
• Musharaka asset should be under control of PKIC-IFD to avoid disposal during Musharaka tenor
• Asset must have a useful life matching the tenure of facility
• Periodic Rental payment schedule and Unit buyout receipt should be timely executed and shared with customer