ABC plans to expand its operations and wants to install Plant and Machinery (PM) costing Rs. 75 million. Direct cost, including accessories and installation, is estimated at Rs. 5 million. The customer has decided to contribute Rs. 20 million and the remaining amount will be contributed by XYZ Islamic Bank (the bank).

PM was purchased on April 1, 2019. The installation process of PM would take 2 months. The tenure of Musharakah financing was agreed to be 5 years. Rentals will be paid biannually. Bank’s share will be divided into units, and ABC will undertake to purchase the bank’s units bi-annually to become the sole owner of the asset.

Devise the Process flow for the transaction?

Answer rating: 100% (QA)

Process flow for the transaction First ABC the client approaches the Islamic bank for purchase of th... View the full answer