In this section, we provide you with a brief overview of the different types of Islamic banking forms, as permitted by Islam and according to the regulations of the Holy Islamic sharia.

1. Murabaha Sales Contract
   A form of direct financing through which the client asks the Bank to purchase a good or an item, and the client pledges to purchase it from the Bank after the Bank purchases it. Accordingly, the Bank purchases this item and it becomes the Bank’s property, and then the item is sold to the client for the first price with adding an agreed-upon profit for the Bank. Thus, a Murabaha Sales Contract consists of four elements.
   
   Benefits:
   • Ease of implementation and application.
   • Fulfills the clients’ purchasing needs for local and imported tangible goods.
      
2. Lease to Own “Leasing”
   A form of direct financing through which an asset owned by the Bank is leased to a client who can benefit from the asset in return for a known leasing fee paid in several installments. The Bank might not be the owner of the asset, in this case, the Bank will purchase this asset based on the request of the client, who will rent it for the specified period, and the client will be responsible for normal maintenance expenses (operational expenses), and the expensing necessary for the use of the item is endured by the Lessor. The ownership of the asset is transferred to the client at the end of the contract term in return for a symbolic payment according to a sales or gift contract. During the leasing period, the client pays the lease amount in a specified number of installments, which are paid on specific dates. In case the client fails to fulfill his payments, the contract will be terminated, and the paid amounts are considered lease fees. Any additional amounts will be returned to the client.
   
   Benefits:
   • Offers solutions for individuals to enable them to own houses and apartments for relatively good prices.
   • Offers solutions for companies and businessmen to enable them to own equipment and machinery necessary for their operations.
   • Long-term repayment terms that are suitable for individuals' income and companies' cash flow.
      
3. Istisna'a:
   A form of direct financing through which the Bank manufactures a specific item or constructs a building based on the request of the client. Istisna’a is a contract of exchange with deferred delivery, applied to specified made-to-order items. It is a binding contract for both parties, taking into consideration that it meets the specified requirements, such as defining the item, its type, quantities, and description, in addition to specifying the price and the terms of payment. Istisna'a is applied by considering the Bank as the manufacturer and the client as the requester of the asset that needs to be manufactured for a named price, and then the Bank shall enter into a contract with a specialized manufacturer/contractor to produce the item in the agreed form, without making any connections between the two contacts, which is known as parallel Istisna’a.
   
   Benefits:
   1. Offers solutions for individuals to enable them to build and prepare houses and apartments.
   2. Offers a solution for companies and businessmen to enable them to finance their manufacturing and production needs.
   3. Provides a solution for financing labor expenses, which is part of the cost of the produced item, which is not available in financing through Murabaha.
       
4. Musharaka
   A form of direct financing in which the Bank and the client jointly provide “the capital required for financing a particular project”, and the Bank and the client share the profits according to the agreed-upon percentage, or according to the percentage of each party’s contribution in the capital. According to the contract, profits are distributed as below:
   • An agreed-upon share for the partner in return for project management and supervision, to be agreed upon in a separate contract.
   • The amount of profit remaining after deducting the partner's share is distributed according to the agreed percentage, or according to the contribution of each party to the capital.
   • In case of loss, the parties distribute the loss according to each party’s contribution in the capital only. However, the partner loses his management efforts and is not liable for any financial loss.
      
   The partners have the right to manage the project, and some have the right to waive their right in management and to limit their role to financial contribution.
   
   There are different types of Musharaka:
   1. Fixed Musharaka (fixed sharing): this is based on the Bank's partial financing of the capital for a project and thereby becomes a partner in owning this project, and this type is divided into two options:
      1. Continuous fixed sharing: which is related to ongoing projects and existing companies.
      2. Limited fixed sharing: which is related to temporary projects and those that end within a specific time.
   2. Digressive Musharaka (diminishing sharing): in which the client replaces the Bank in its ownership of the assets in the agreed project, either gradually or at once,
      according to the terms agreed in the Musharaka contract.
       
5. Mudaraba:
   An agreement between two parties where one partner provides the money (the Bank) and the other offers his efforts and work experience to manage the work (Mudarib), and the profits gained from this project will be shared according to the agreed terms. In case of loss, the provider of the money loses the money, and the other party loses his efforts, except in case of negligence from the later party
   
   Mudaraba is divided into two types:
   • Absolut Mudaraba: The money provider does not request any work conditions or constraints.
   • Restricted Mudaraba: The money provider requests adding specific terms and restrictions, and this is the type used in Islamic banks.