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Diminishing Musharaka


Diminishing Musharaka - is a form of partnership in which one of the partner's promises to buy the equity share of the other partner gradually until the ownership of the equity is completely transferred to one of the partner. This transaction starts with the formation of a partnership, after which buying and selling of the equity take place between the two partners.

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How it works.

  •  In Diminishing Musharaka, under the concept of Shirkal-al-Milk, Maldives Islamic Bank (MIB) and Customer enter into Musharaka Agreement to jointly purchase the propert
  • The shares of the Bank will be divided into a number of units
  • The Customer will purchase the units belonging to the Bank periodically until he/she acquires the whole ownership of the property


Components of Diminishing Musharaka

  •   Joint ownership between the Bank and Customer
  •  Bank will lease's its portion of the shares to the Customer
  •  Customer purchases Bank's shares


Operation of Diminishing Musharaka




Product Features of MIB's Diminishing Musharaka facility

 

Conditions of the property

  • Completed apartments, flats, houses or buildings
  • Age of the property should not exceed 10 years at the time of contract being entered between the customer and MIB
  • The property must be in good condition acceptable by MIB

 

Customer requirements

  • For individual customer, he/she must be of legal age of 21 years old.
  • Customer must be in permanent employment at least for the last 36 months.
  • Customer's monthly payment amount should not exceed 40% of his/her confirmed gross income.
  • Customer's monthly commitments with all financial institutions including the requested financing should not exceed 50% of his/her confirmed gross income.
  • For institution, it must be legally established as per the requirement of local law.

 

List of required documents

  • Completely filled application form
  • Copy of valid ID card
  • Bank statement of the applicant(s) (for last continuous 6 months)
  • Letter from employer to MIB confirming customer's employment and salary
  • Salary slip for last 3 continuous months
  • If self-employed

o   Copy of registration certificate of the company/business

o   Copy of memorandum of association and articles of association of the company / copy of the partnership agreement if it's a partnership

o   Profile of the company/business

o   Last three years audited financial reports of the company/partnership

o   Current year management accounts of the company/partnership

o   Bank statement of the company/partnership (for last 6 continuous months)

 

 

Tenure

  • Up to 20 years, subject to governing laws

 

Rental Profit Rate

  •  From 10.5% - 12% per annum

 

Investment Limit

  • Banks maximum financing/investment is 80% of the purchase price

 

Security requirement

  • Mortgage on property
  •  Additional collateral may be required in case by case basis

 

Takaful /Insurance

  • Property should be insured by Takaful / Insurance coverage