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Do you know the uniqueness of Istisna’ in Islamic finance? You may have heard the word “istisna” and you may be wondering what it is. In this article, we will explain what it is. Hopefully, you can use this to your advantage with this knowledge.
Firstly, Istisna is a sale contract between the seller (bank) and the buyer to manufacture or build an asset at a pre-determined future time.
In the case of istisna, the bank sells an asset even before its existence or completion. The buyer can pay the seller (bank) either in different instalments, at the delivery of the asset, or after completion. In Islamic Finance, istisna can be used to finance the construction of the following: houses, roads, projects, plant, and types of machinery.
Furthermore, infrastructure projects are the main examples of istisna’ application. This includes the construction of power plants, factories, roads, schools, hospitals, buildings and residential developments.
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