Bay Salam: A Proposed Model for Shari'ah Compliant Agriculture Financing

Abstract

This research paper focuses on the discussion of Salam financing and its prospects in agriculture sector of the Pakistan economy. For this purpose, a model of Salam financing is proposed. This model can be used for single crop financing and multiple season financing as well however the multiple crop finance would be little bit complex. Therefore, we will focus on single season financing. Primary objective of this research is to introduce a interest free agriculture financing with minimum involvement of middleman, specifically for small scale farmers who face more financial troubles. Salam model for agriculture in this research study is focused on excelling the farmers both financially and technically which consequently improve the land productivity. The study also discusses a brief comparative note on the Salam models proposed in the literature and their problems. Risks associated with the proposed model of this study are also mentioned in detail along with their mitigation procedures.

Keywords: Bay Salam Financing, Agriculture Financing, Farmer, Agriculture Financing