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Handbook of Isme

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Handbook on Islamic SME Financing

Islamic Banking Department State Bank of Pakistan

The Team

Name

Designation

Contact

Mr. Pervez Said

Director

Pervez.Said@sbp.org.pk

Mr. Imran Ahmad

Senior Joint Director

Imran.Ahmad@sbp.org.pk

Ms. Fatima Javaid

Regulating Officer

Fatima.Javaid@sbp.org.pk

TABLE OF CONTENTS
S.No 1 2 3 4 5 6 Background Introduction Prudential regulations for SME Financing Importance in light of Strategic Plan for Islamic Banking Industry Scope of Islamic Banking over Conventional Banking in current Financial crises Proposed Products for Islamic SME Financing Need for Risk Management 7 Murabaha Financing
Transaction Structure Accounting Treatment Risk Management 12 12 15 15 18 20 18 21 24 25 26 27 29 30 31 31 33 34 35 35 38 39 40

PARTICULARS

Page No. 1 2 4 9 11

8

Ijarah Based Financing
Basic Rules Accounting Treatment Risk Management

9

Salam Based Financing
Basic Rules Accounting Treatment Risk Management

10

Diminishing Musharaka
Basic Transaction Structure Accounting Treatment Risk Management

11

Istisna Financing
Flow of Transaction Accounting Treatment Risk Management

12

Project Financing

Handbook On Islamic SME Financing
BACKGROUND
One of the important characteristics of a flourishing and growing economy is a blooming SMEs sector. Small and medium enterprises play an important role in the development of a country. SMEs contribute to economic growth in various ways like as by creating employment for rural and urban growing labor force, providing desirable sustainability and innovation in the economy as a whole. Further, a large number of people rely on this sector directly or indirectly. Most of the current larger enterprises have their origin in small and medium enterprises. The SME sector itself can be classified into micro enterprises, small enterprises

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