It is a form of financing where the Bank purchases the goods for the customer. The customer pays the prices of the goods at cost which shall be properly disclosed by the Bank, plus the agreed profit. Payment by the customer may be at spot or at a future date agreed by the parties, ether in lump sum or installment. The tenor is usually short-term.
Purpose: For Working Capital; for acquisition of fixed assets or machineries & equipment for business use.
Tenor : Cash flow based, but not longer than the economic life of the financed asset.