6. Types of Islamic Finances

Oracle FLEXCUBE supports creation of finance accounts for the following product categories:

This chapter contains the following sections:

6.1 Murabaha Account Input

Murabaha financing is a contract between a customer and the bank, wherein the bank purchases goods upon request of the client, who makes deferred payments that cover the costs and at an agreed profit margin for the bank.

On completion of the agreed payments, the ownership of the goods is transferred to the customer. This finance may or may not be linked to physical fixed assets.

This section contains the following topics:

6.1.1 Creating Murabaha Accounts

You can create and modify Murabaha accounts using ‘Murabaha Account Details’ screen. To invoke this screen, type ‘CIDMURAC’ in the field at the top right corner of the application tool bar and click the adjoining arrow button.

This section contains the details that are specific to Murabaha accounts. For further details and field information, refer to the section ‘Account Main Details/Light Finances’ under chapter ‘Account Creation’ of ‘Islamic Financing’ user manual.

You can specify the following details:

Branch Code

The system displays the branch code of the current branch.

Product

Specify the product code. The option list displays all valid product codes maintained in the ‘Product Definition’ screen.

Click ‘P’ button to populate the Product Category, Value Date and Maturity Date. Based on the product code selected, the main screen will display all these values.

Account

Specify the account number. If you have set the required parameters at the branch level, the system automatically generates the account number. If the parameter is not set, you need to capture it manually.

Alternate Account Number

Enter the alternate account number. This can be the account number of this account as maintained in the existing system from which Oracle FLEXCUBE received the data.

Additional Details

Application Number

The system displays the Application Number in this field.

Note

This is applicable only if the origination of the finance is in Oracle FLEXCUBE or is inter­faced.

Product Category

The system displays the product category in this field.

User Reference

Specify the user reference number. This number can be used to identify the account.

User Defined Status

Specify the status of the account.

Derived Status

The system displays the derived status of the account.

Securitization Status

Select the securitization status from the drop-down list.

Contract Stage

Select the contract stage from the drop-down list. The options available are:

6.1.2 Main Tab

Click ‘Main’ tab to capture the main details of the account.

Specify the following details:

Contract Details

Book Date

Specify the book date of the finance in this field using the date button. You can use the date button to choose the date from the calendar.

Value Date

Specify the value date of the finance. You can use the date button to choose the date from the calendar.

Purchase Details

Total Asset Value

Specify the total asset value.This is a mandatory input.

Takaful Cost

Specify the takaful cost here.

Maintenance/Other Cost

Specify the maintenance or other cost here.

Asset Type

Select the type of asset from the drop-down list. The list displays the following values:

6.1.2.1 Capturing Multiple Asset Details

Click ‘Multiple Asset’ button under ‘Asset Details’ to capture the additional details about multiple assets linked to the account. Based on the product code chosen, the system identifies the asset category linked to the account and displays the appropriate screen. In case of a Murabaha account, the following screen is displayed.

For a detailed explanation of the fields in this screen, refer to the section ‘Multiple Asset Details’ in chapter ‘Account Creation’ of this user manual.

Sale Details

Buyer Customer ID

Specify the customer ID. You can choose the required customer ID from the option list. When you choose it from the option list, the system displays a new screen ‘Find Customer Details’. You can enter search criteria in this screen. For example, you can enter the customer name or number and click on the ‘Search’ button. The system then fetches you all the details corresponding to the customer name or account. Select the required customer ID and click OK button.

Customer Name

Based on the customer ID selected, the system displays the name of the customer.

Total Sale Value

Specify the total sale value.

Financing Details

Down Payment Amount

Specify the down payment amount details. This amount will be derived from total asset value, by applying the down payment percentage to it.

Down Payment %

Specify the

Amount Financed

The financed amount is displayed here. Amount finance will be derived as:

Amount Finance = Total Asset Value + Total Cost + Maintenance/Other Cost - Down payment Amount.

Staff Finance

Specify the staff finance amount here. You need to enter this if “Staff Finance Allowed” box is checked at product level.

Repayment Terms

Number of Installments

Specify the number of installments. This is the number of times the schedule is repeated for a chosen frequency. If the frequency is ‘Monthly’ and number is ‘1’, it implies once a month.

Unit

Enter the installment unit for the component for the schedule. The units of frequency definition can be Daily, Weekly, Bullet, Monthly, Quarterly, Half Yearly or Yearly.

Select the unit of the schedule from the option list.

Frequency

This is the number of times the schedule will repeat for a unit. If it is 2 and the unit is ‘Monthly’, it implies twice a month.

Installment Start Date

Specify the start date of the installment. This may be used to schedule an installment on a particular date of the month.

Maturity Type

Select the type of maturity from the drop-down list. The system displays the following values:

Maturity Date

Select the scheduled maturity date of the finance from the adjoining calendar.The tenor can also be entered to compute the Finance Maturity Date.

Tenor

Specify the loan tenor.

Grace Period

Customer Grace Period

Specify the customer grace period.

Frequency

Select the frequency of grace period from the drop-down list. The list displays the following values:

Supplier Grace Period

The system displays the supplier grace period and frequency for Murabaha contracts maintained at the product level, based upon this period the first installment date of the finance contract will be derived. However you can modify it. After modification you can edit and explode the schedules from the ‘Components’ tab. The modified schedules will be displayed after explode.

Frequency

The system displays customer grace period and frequency for Murabaha contracts maintained at the product level, based upon this period the first installment date of the finance contract will be derived. However you can modify it. After modification you can edit and explode the schedules from the ‘Components’ tab. The modified schedules will be displayed after explode.

Select the frequency of grace period from the drop-down list. The list displays the following values:

Other Details

Wakala Reference

Specify the reference number of the Wakala contract.

Future D/P Receivable

Your customer need not pay the entire down payment amount in a single installment. The customer can pay it in parts. In such cases, you can specify the amount to be received in the future from the customer. The aggregate of down payments received and ‘Future D/P Receivable’ should be equal to the ‘Down Payment’ amount.

Note

Amount specified in this field cannot exceed the total down payment amount for the con­tract. This field should be operationally controlled, because the system does not track the ‘Future D/P Receivable’ amount which is received from the customer.

Total Amount

Specify the sum of the financed amount and down payment.

Balloon + Principal

Specify the sum of the balloon amount and principal amount.

Balloon Payment Details

Balloon %

Specify the balloon percentage value between 0 to 100.

Balloon Amount

The system calculates the balloon amount based on the amount financed and balloon percentage.

Balloon Rollover Required

Check this check-box if the balloon amount is required to be rolled over.

Rollover Instalments

Specify the required number of instalments for the balloon rollover period.

Rollover Unit

Select the type of balloon rollover instalments. The list displays the following values.

Exclude Instalment from Balloon

Check this box to exclude the regular instalments in the balloon schedule.The last schedule due will be the balloon amount. If this check box is selected then balloon rollover facility is not allowed.

If the check box is not selected, the balloon amount is added to regular schedule due for the last instalment.

Note

Calculating Balloon Repayment

Balloon without Rollover

For Balloon without rollover, the balloon amount should be paid as bullet payment on the maturity date.

If the last schedule includes regular instalments plus balloon, then:

If the last schedules only balloon, then:

Balloon with Rollover

For Balloon with rollover, the balloon amount should be divided across multiple schedule dates.

Note

Product Level Balloon Components

BALLOON_PROFIT_NR - This component will hold the balloon period profit for the normal (no rollover) period. The profit is derived based on the IRR when BALLOON_IRR_RATE SDE is used.

The UDE value is captured manually when a balloon rate is input instead of a system derived rated based on IRR.

BALLOON_PROFIT_WR - This component will hold the balloon period profit for the balloon rollover period. This profit is derived based on flat rate on the balloon amount.

Note

Cost Details

Currency

Specify the currency of the account. The option list displays all valid currency codes maintained in the system. Choose the appropriate one.

Amount Financed

Specify the total principal amount of the finance.

Note

If the checkbox ‘Calculate Gross Principle’ is checked, then the amount financed is the gross principal.

Sale Value

Total Sale Value

The system displays the total of principal and profit amount as of initiation date. If the box ‘Recompute schedule on IRR’ is checked in the ‘Product Maintenance’ screen for the linked product and balloon amount is provided, the system will compute this value as the sum of principal, normal profit, balloon principal and balloon profit.

URBOUN

Down Payment

Specify the finance amount paid by the customer upfront – Owners contribution. In case of Ijarah contracts, for a financial lease the down payment will be considered entirely towards the principal. In case of an operational lease, the entire down payment will be considered as income. Note that the down payment amount cannot be amended after authorization.

Effective Date

You can specify the following detail here:

Effective Date

The effective date is used to pick the UDE value and apply it for the given period. The system displays this date from the General UDE maintenance screen.

For a product + currency combination, if the UDE values are not maintained for the effective date, then the system defaults ’0‘. You can edit it. You can maintain different effective dates for the same UDE with different values. For instance, you can give different effective dates for different rate types maintained for the moratorium UDE.

For further information on the other tabs of the screen, refer to the section ‘Account Main Details/Light Finances’ under chapter ‘Account Creation’ of ‘Islamic Financing’ user manual.

6.1.3 Charges Button

Click ‘Charges’ tab in ‘Islamic Account Details’ screen to invoke the following details:

You can specify the following details:

Component Header

Component Name

Specify the component name.

Click ‘+’ button to specify other necessary details.

Calculation Type

The system displays the type of calculation.

Component Currency

The system displays the currency associated with the component. The component currency is defaulted from the Product level.

Settlement Currency

Specify the settlement currency code. Alternatively, you can select settlement currency code from the option list. The list displays all settlement currency code maintained in the system.

Effective Date

Select the effective date from the adjoining calendar.

Service Branch

Specify the service branch code. Alternatively, you can select service branch code from the option list. The list displays all service branch code maintained in the system.

Service Account

Specify the service account number. Alternatively, you can select service account number from the option list. The list displays all service account number maintained in the system.

Due Date

The system displays the due date.

Amount Due

The system displays the due amount.

Amount Waived

The system displays the amount waived.

Details

Event Code

The system displays the event code.

Amount Settled

The system displays the amount settled.

Schedule Date

The system displays the schedule date.

6.2 Ijarah Account Input

Ijarah is a lease contract wherein the bank purchases property or capital equipment and leases it to a customer. The bank may rent the property/equipment and receive the rent or invest it in the business and get a share of the profit.

Ownership of the property or equipment passes on to the customer either during the schedules of payment or at the end of the period.

This section contains the following topics:

6.2.1 Creating Ijarah Accounts

You can create and modify Ijarah accounts using ‘Ijarah Account Details’ screen. To invoke this screen, type ‘CIDIJAAC’ in the field at the top right corner of the application tool bar and click the adjoining arrow button.

This section contains the details that are specific to Ijarah accounts. For further details and field information, refer to the section ‘Creating Murabaha Accounts’ in this chapter.

6.2.2 Main Tab

Click ‘Main’ tab to capture the main details of the account.

Lessee Details

Customer ID

Specify the customer ID. You can choose the required customer ID from the option list.

Customer Name

Based on the customer ID selected, the system displays the name of the customer.

Lease Details

Down Payment %

Specify the percentage of down payment amount.

Down Payment Amount

Specify the down payment amount details. This amount will be derived from total asset value, by applying the down payment percentage to it.

Ijarah Amount

The Ijarah amount is displayed here.Amount finance will be derived as:

Ijarah Amount = Total Asset Value + Takaful Cost + Maintenance/Other Cost - Down payment Amount.

Asset/Investment Details

Total Asset Value

Specify the total asset value.This is a mandatory input.

Takaful Cost

Specify the takaful cost here.

Maintenance/Other Cost

Specify the maintenance or other cost here.

Asset Type

Select the type of asset from the drop-down list. The list displays the following values:

Grace Period

A grace period is a period of time past the deadline for fulfilling an obligation during which a penalty that would be imposed for being late is waived.

Supplier Grace Period

Specify the supplier grace period and frequency for all contracts linked to this product, You can specify this value in terms of days, months or years. Choose the appropriate unit from the adjoining drop-down list. Based upon this period the first installment date of the finance contract will be derived. This field is applicable for Murabaha products only.

Frequency

Select the frequency for handover date extension from the adjoining drop-down list:

Customer Grace Period

Specify the customer grace period and frequency for all contracts linked to this product, You can specify this value in terms of days, months or years. Choose the appropriate unit from the adjoining drop-down list. Based upon this period, the first installment date of the finance contract will be derived. This field is applicable for Murabaha products only.

Frequency

Select the frequency for handover date extension from the adjoining drop-down list:

Forward Ijarah Construction Details

End Construction Date

The user can end the date on which the construction has been completed.

Original Construction End Date

Specify the original end date of the construction for which the customer has sought the finance.

End Construction Date

Specify the end date of the construction for which the customer has sought the finance.

Handover Applicable

The system defaults the handover applicable value based on the maintenance in the Islamic Product Preference (CIDPRMNT) screen. You can modify the defaulted value.

For forward Ijarah and Musharaka under contruction product types, if Handover Applicable flag is checked and if handover date is not available on product default then the construction end date value will be defaulted to handover date.

Handover Date

Select the handover date from the adjoining calendar. You can enter the handover date only if the Handover Applicable field is checked. The handover date can be greater than or equal to the construction end date.

On product default, if Handover Applicable flag is checked and if handover date is not available, then the construction end date value will be defaulted to handover date. This is not applicable for Istisna.

Handed Over

The system checks this box if it is enabled in the Islamic value dated amendment screen.

6.2.2.1 Capturing Multiple Asset Details

Click ‘Multiple Asset’ button under ‘Asset Details’ to capture the additional details about multiple assets linked to the account. Based on the product code chosen, the system identifies the asset category linked to the account and displays the appropriate screen. In case of an Ijarah account, the following screen is displayed.

For a detailed explanation of the fields in this screen, refer to the section ‘Multiple Asset Details’ in chapter ‘Account Creation’ of this user manual.

6.2.3 Inventory Tracking Tab

Click ‘Inventory Tracking’ tab to capture the details related to inventory.

For a detailed explanation of the fields in this screen, refer to the section ‘Details of Inventory’ in chapter ‘Account Creation’ of this user manual.

6.2.4 Ijarah Tab

Click ‘Ijarah’ tab to capture the details specific to Ijarah.

For a detailed explanation of the fields in this screen, refer to the section ‘Details of Ijarah’ in chapter ‘Account Creation’ of this user manual.

For further information on the other tabs of the screen, refer to the section ‘Account Main Details/Light Finances’ under chapter ‘Account Creation’ of ‘Islamic Financing’ user manual.

6.3 Istisnaa Account Input

Istisnaa is similar to a regular financing for working capital. All features are similar to a Murabaha except that the actual delivery of goods happen at a later date after the receipt of all due payments.

This section contains the following topics:

6.3.1 Creating Istisnaa Accounts

You can create and modify Istisnaa accounts using ‘Istisnaa Account Details’ screen. To invoke this screen, type ‘CIDISTAC’ in the field at the top right corner of the application tool bar and click the adjoining arrow button.

This section contains the details that are specific to Istisnaa accounts. For further details and field information, refer to the section ‘Creating Murabaha Accounts’ in this chapter.

6.3.2 Main Tab

Click ‘Main’ tab to capture the main details of the account.

Contract Details

You can specify the following contract details:

Book Date

The system displays the booking date.

Value Date

Select the value date from the adjoining calendar.

Currency

Specify the currency code. Alternatively, you can select currency code from the option list. The list displays all valid currency code maintained in the system.

Vendor Details

Allow Multi-Party

Check this box to allow multiple parties for the account.

Contract Status

Status

Specify the contract status. The drop-down list displays the following options:

Choose the appropriate one.

Window of Repayment

Units

The system defaults the window of repayment units from the Islamic product preference screen. You can modify it.

Frequency

The system defaults the window of repayment frequency from the Islamic product preference screen. You can modify it.

Note

The schedule for Istisna are as follows:

Schedules

Starts from

Ends on

Construction Period

Value Date

Construction End Date + Window of Repayment

Supplier Grace Period

Construction End Date +Window of Repayment

Supplier grace period start date + Supplier grace days

Customer Grace Period

Supplier grace period end date

Customer grace period start date + Customer grace days

Normal Profit Period

Customer grace period end date

Based on schedule defi­nition. This will be updated as maturity date.

Handover Applicable

The system defaults the handover applicable value based on the maintenance in the Islamic Product Preference (CIDPRMNT) screen. You can modify the defaulted value.

Handover Date

Select the handover date from the adjoining calendar. You can enter the handover date only if the Handover Applicable field is checked. The handover date should be greater than the construction end date.

On product default, if Handover Applicable flag is checked and if handover date is not available, then the construction end date value will be defaulted to handover date.

If handover date and construction end date are same, then the system will not build the schedule for handover period.

For Istisna products, system will not build the handover period schedule based on the handover date.

Handed Over

Check this box if the property is handed over.

Asset/Investment Details

Total Asset Value

Specify the total asset value.This is a mandatory input.

Takaful Cost

Specify the takaful cost here.

Maintenance/Other Cost

Specify the maintenance or other cost here.

Asset Type

Select the type of asset from the drop-down list. The list displays the following values:

6.3.2.1 Capturing Multiple Asset Details

Click ‘Multiple Asset’ button under ‘Asset Details’ field to capture the additional details about multiple assets linked to the account. Based on the product code chosen, the system identifies the asset category linked to the account and displays the appropriate screen. In case of an Istisnaa account, the following screen is displayed.

For a detailed explanation of the fields in this screen, refer to the section ‘Multiple Asset Details’ in chapter ‘Account Creation’ of this user manual.

6.3.2.2 Capturing Party Details

Click ‘Party Details’ button under ‘Vendor Details’ to capture the details about parties linked to the account. The system displays the following screen.

For a detailed explanation of the fields in this screen, refer to the section ‘'Party Details’ in chapter ‘Account Creation’ of this user manual.

Buyer Details

Buyer Customer ID

Specify the customer ID. You can choose the required customer ID from the option list.

Customer Name

Based on the customer ID selected, the system displays the name of the customer.

Financing Details

Down Payment Amount

Specify the down payment amount details. This amount will be derived from total asset value, by applying the down payment percentage to it.

Down Payment %

Specify the percentage of down payment amount.

Amount Financed

Specify the finance amount details.Amount finance will be derived as:

Amount Finance = Total Asset Value + Takaful cost + Maintenance Cost/Other Cost - down payment amount.

Staff Finance

Specify the staff finance details.

For more details on the fields refer section titled “Creating Account Details Light Finances” in ‘Account Creation’ Chapter of this User Manual.

6.3.2.3 Preferences Tab

Click ‘Preferences tab’ to capture the preference details.

Percentage of Completion

The system displays the maximum work completion percentage specified for all the Manual Disbursements against the account. The system displays the value when we query for Istisna account.

6.3.3 Inventory Tracking Tab

Click ‘Inventory Tracking’ tab to capture the details related to inventory.

For a detailed explanation of the fields in this screen, refer to the section ‘Details of Inventory’ in chapter ‘Account Creation’ of this user manual.

For further information on the other tabs of the screen, refer to the section ‘Account Main Details/Light Finances’ under chapter ‘Account Creation’ of ‘Islamic Financing’ user manual.

6.4 Mudarabah Account Input

Mudarabah is a contract between the investors and the bank. The investor approaches the bank and shares the investment plans. Based on that, the bank funds the money for the business and shares the profit earned by the investor. The profit is collected as Mudarabah fee.

This section contains the following topics:

6.4.1 Creating Mudarabah Accounts

You can create and modify Mudarabah accounts using ‘Mudarabah Account Details’ screen. To invoke this screen, type ‘CIDMUDAC’ in the field at the top right corner of the application tool bar and click the adjoining arrow button.

This section contains the details that are specific to Mudarabah accounts. For further details and field information, refer to the section ‘Creating Murabaha Accounts’ in this chapter.

6.4.2 Main Tab

Click ‘Main’ tab to capture the main details of the account.

Contract Details

Book Date

Specify the book date of the finance in this field using the date button. You can use the date button to choose the date from the calendar.

Value Date

Specify the value date of the finance. You can use the date button to choose the date from the calendar.

Currency

Specify the currency of the account. The option list displays all valid currency codes maintained in the system. Choose the appropriate one.

Investment Description

Investment Description

Specify a brief description of the investment.Total Asset Value

Specify the total asset value.This is a mandatory input.

Takaful Cost

Specify the takaful cost here.

Maintenance/Other Cost

Specify the maintenance or other cost here.

Asset Type

Select the type of asset from the drop-down list. The list displays the following values:

Mudarib DetailsCustomer ID

Specify the customer ID. You can choose the required customer ID from the option list.

Customer Name

Based on the customer ID selected, the system displays the name of the customer.

Investment Share Details

Mudarib Share %

Specify the percentage of down payment amount.

Mudarib Share Amount

Specify the down payment amount details. This amount will be derived from total asset value, by applying the down payment percentage to it.

Rab-Al-Maal Share

The Rab-Al-Maal amount is displayed here.

Rab-Al-Maal amount will be derived as:

Rab-Al-Maal amount = Total Asset Value + Takaful Cost + Maintenance/Other Cost - Mudarib Share amount.

6.4.2.1 Capturing Multiple Asset Details

Click ‘Multiple Asset’ button under ‘Asset Details’ to capture the additional details about multiple assets linked to the account. Based on the product code chosen, the system identifies the asset category linked to the account and displays the appropriate screen. In case of a Mudarabah account, the following screen is displayed.

For a detailed explanation of the fields in this screen, refer to the section ‘Multiple Asset Details’ in chapter ‘Account Creation’ of this user manual.

6.4.3 Inventory Tracking Tab

Click ‘Inventory Tracking’ tab to capture the details related to inventory.

For a detailed explanation of the fields in this screen, refer to the section ‘Details of Inventory’ in chapter ‘Account Creation’ of this user manual.

For further information on the other tabs of the screen, refer to the section ‘Account Main Details/Light Finances’ under chapter ‘Account Creation’ of ‘Islamic Financing’ user manual.

6.5 Musharaka Account Input

Musharaka financing is the participation of the bank in a venture by a company or a customer. The customer and the bank together raise the capital, usually the working capital, for the venture. Bank and the customer share the profits and losses as per to mutually agreed proportions.

This section contains the following topics:

6.5.1 Creating Musharaka Accounts

You can create and modify Musharaka accounts using ‘Musharaka Account Details’ screen. To invoke this screen, type ‘CIDMUSAC’ in the field at the top right corner of the application tool bar and click the adjoining arrow button.

This section contains the details that are specific to Musharaka accounts. For further details and field information, refer to the section ‘Creating Murabaha Accounts’ in this chapter.

6.5.2 Main Tab

Click ‘Main’ tab to capture the main details of the account.

Contract Details

Book Date

Specify the book date of the finance in this field using the date button. You can use the date button to choose the date from the calendar.

Value Date

Specify the value date of the finance. You can use the date button to choose the date from the calendar.

Currency

Specify the currency of the account. The option list displays all valid currency codes maintained in the system. Choose the appropriate one.

Investment Description

Investment Description

Specify a brief description of the investment.

Total Asset Value

Specify the total asset value.This is a mandatory input.

Takaful Cost

Specify the takaful cost here.

Maintenance/Other Cost

Specify the maintenance or other cost here.

Asset Type

Select the type of asset from the drop-down list. The list displays the following values:

6.5.2.1 Capturing Multiple Asset Details

Click ‘Multiple Asset’ button under ‘Asset Details’ to capture the additional details about multiple assets linked to the account. Based on the product code chosen, the system identifies the asset category linked to the account and displays the appropriate screen. In case of a Musharaka account, the following screen is displayed.

For a detailed explanation of the fields in this screen, refer to the section ‘Multiple Asset Details’ in chapter ‘Account Creation’ of this user manual.

Customer Details

Customer ID

Specify the customer ID. You can choose the required customer ID from the option list.

Customer Name

Based on the customer ID selected, the system displays the name of the customer.

Investment Sharing Details

Customer Share %

Specify the percentage of down payment amount.

Customer Share Amt

Specify the down payment amount details. This amount will be derived from total asset value, by applying the down payment percentage to it.

Bank Share

The financed amount is displayed here.The bank’s share will be derived as:

Bank’s Share = Total Asset Value + Takaful Cost + Maintenance/Other Cost - Customer Share Amount.

Current Investment Ratio

Bank Share

The system displays the percentage of principal amount contributed by the bank.

Customer Share

The system displays the percentage of principal amount contributed by the customer.

Musharaka Under Construction Details

Original Construction End Date

The system displays.original construction end date.

Construction End Date

Select the construction end date from the adjoining calendar.

The nominal disbursement schedule end date should not be greater than construction end date. Principal disbursements should not happen beyond this date.

Note

System considers the construction end date for calculating the maturity date and tenor when moratorium schedules are defined for construction period.

Handover Applicable

The system defaults the handover applicable value based on the maintenance in the Islamic Product Preference (CIDPRMNT) screen. You can modify the defaulted value.

Handover Date

Select the handover date from the adjoining calendar. You can enter the handover date only if the Handover Applicable field is checked. The handover date can be greater than or equal to the construction end date.

On product default, if Handover Applicable flag is checked and if handover date is not available, then the construction end date value will be defaulted to handover date.

For Istisna products, system will not build the handover period schedule based on the handover date.

Handed Over

Check this box if the property is handed over.

Grace Period

Customer Grace Period

Specify the customer grace period.

Frequency

Select the frequency of grace period from the drop-down list. The list displays the following values:

Supplier Grace Period

The system displays the supplier grace period and frequency for Murabaha contracts maintained at the product level, based upon this period the first installment date of the finance contract will be derived. However you can modify it. After modification you can edit and explode the schedules from the ‘Components’ tab. The modified schedules will be displayed after explode.

Frequency

The system displays customer grace period and frequency for Murabaha contracts maintained at the product level, based upon this period the first installment date of the finance contract will be derived. However you can modify it. After modification you can edit and explode the schedules from the ‘Components’ tab. The modified schedules will be displayed after explode.

Select the frequency of grace period from the drop-down list. The list displays the following values:

6.5.3 Inventory Tracking Tab

Click ‘Inventory Tracking’ tab to capture the details related to inventory.

For a detailed explanation of the fields in this screen, refer to the section ‘Details of Inventory’ in chapter ‘Account Creation’ of this user manual.

For further information on the other tabs of the screen, refer to the section ‘Account Main Details/Light Finances’ under chapter ‘Account Creation’ of ‘Islamic Financing’ user manual.

6.6 Tawarooq Account Input

Tawarooq is a finance contract between the bank and the customer for buying an underlying commodity from a dealer. At the request of the customer, the bank advises the dealer to sell the commodity at a profit or loss. The sale proceeds of the assets so disposed by the dealer will be paid to the customer.

There cannot be any financing transaction without an underlying commodity.

This section contains the following topics:

6.6.1 Creating Tawarooq Accounts

You can create and modify Tawarooq accounts using ‘Tawarooq Account Details’ screen. To invoke this screen, type ‘CIDTAWAC’ in the field at the top right corner of the application tool bar and click the adjoining arrow button.

This section contains the details that are specific to Tawarooq accounts. For further details and field information, refer to the section ‘Creating Murabaha Accounts’ in this chapter.

6.6.2 Main Tab

Click ‘Main’ tab to capture the main details of the account.

Buyer Details

Customer ID

Specify the customer ID. You can choose the required customer ID from the option list.

Customer Name

Based on the customer ID selected, the system displays the name of the customer.

Cost Details

Currency

Specify the currency of the account. The option list displays all valid currency codes maintained in the system. Choose the appropriate one.

Amount Financed

Specify the total principal amount of the finance.

Down Payment

Specify the finance amount paid by the customer upfront – Owners contribution. In case of Ijarah contracts, for a financial lease the down payment will be considered entirely towards the principal. In case of an operational lease, the entire down payment will be considered as income. Note that the down payment amount cannot be amended after authorization.

Contract Status

Status

Specify the contract status. The drop-down list displays the following options:

Choose the appropriate one.

6.6.2.1 Capturing Multiple Asset Details

Click ‘Multiple Asset’ button under ‘Asset Details’ to capture the additional details about multiple assets linked to the account. Based on the product code chosen, the system identifies the asset category linked to the account and displays the appropriate screen. In case of a Tawarooq account, the following screen is displayed.

For a detailed explanation of the fields in this screen, refer to the section ‘Multiple Asset Details’ in chapter ‘Account Creation’ of this user manual.

6.6.3 Inventory Tracking Tab

Click ‘Inventory Tracking’ tab to capture the details related to inventory.

For further information on the other tabs of the screen, refer to the section ‘Account Main Details/Light Finances’ under chapter ‘Account Creation’ of ‘Islamic Financing’ user manual.