Istisna'a (request to manufacture) is a contract between the customer "mustasni" and the Bank "maker or manufacturer". Where the bank, based on the customer's request, manufactures or obtains a prescribed commodity called "masnooa" or "manufactured ", provided however, that the manufactured raw material and the cost of manufacturing is borne by the manufacturer against a price that could be paid in cash or entirely deferred or paid in installments.

Istisna'a is an obliging contract from the date when it is concluded as long as the bank has manufactured the required product according to specification and agreement.

Parallel istisna'a

Parallel Istisna'a is a second sale contract entered into by the bank with a subcontractor to fulfill its contractual obligations towards the customer in the first Istisna'a contract. It is a contract between the bank (mustasni) and the subcontractor (manufacturer) whereby the subcontractor manufactures the agreed product in the Istisna'a contract against an agreed price, to be paid according to the contract execution phases.

Steps of the istisna'a sales

1)     The customer submits an application expressing the desire to purchase a described commodity manufactured by the Bank against an agreed price, paid either in advance, deferred or in installments. (Price calculation by the bank will consider the actual price of Parallel Istisna'a, plus a profit suitable to the bank).

2)     The bank study the transaction, and after having ensuring the economic feasibility, sets out the conditions and guarantees required for approval.

3)     The bank signs the Istisna’a contract with the customer, undertaking to manufacture and deliver the commodity within an agreed time schedule.

4)     The bank signs a parallel Istisna'a contract with the manufacturer (subcontractor) expressing the desire to manufacture the commodity subject of the Istisna'a contract (same specifications) and agrees with the subcontractor on the suitable price and time of delivery.

5)     The bank takes over and delivers the manufactured commodity to the customer within the agreed timeframe.

Area of application

Istisna'a contract is applied in different industries, such as machineries and equipments made in big factories or workshops.

The Istisna'a contract is also applied in the construction industry such as apartment buildings, hospitals, schools, universities, gas stations and farms and is generally used in various industries, as long as such industry is regulated by certain standards and specifications.