Islamic Banking: Home Purchase Financings IV: Bai Bithamen Ajil and Istisna'a - Parallel Istisna'a

Abstract

This article describes two structures that are used in Shari'ah-compliant home purchase financings: the bai bithamen agil (BBA; deferred payment sale) and the istisna'a - parallel istisna'a (construction contract - parallel construction contract). The BBA structure is used primarily in Malaysia and other Southeast Asian jurisdictions, and is used in other areas of real estate finance as well. The istisna'a - parallel istisna'a is used in construction of real estate projects and in other project financings and infrastructure financings.

Keywords: Islamic banking, banking, Islamic finance, bai bithamen ajil, BBA, istisna'a, mortgage, house, home, real estate, project finance, infrastructure finance

JEL Classification: E40, E41, E44, F00, F02, F20, F21, F23, F30, G21, G24, G29, G30