Salam means a contract or agreement in which advance payment
is made for goods/commodities to be delivered at a future date. The seller
undertakes to deliver some specific goods to the buyer at a future date in
exchange of an advance price fully paid at the time of agreement. It is
necessary that the quality of the commodity intended to be purchased is fully
specified leaving no ambiguity leading to dispute. Bai Salam covers approximately
everything which is capable of being definitely described as to quantity,
quality and workmanship. For Islamic banks, this product is ideal for
agriculture financing, however, this can also be used to finance the working
capital needs of the customers or Agriculturist.
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