Diminishing Musharakah Application & Documentation

DM - Application
Diminishing Musharakah can be used in the following cases to provide financing to Corporate customers by Meezan Bank. For long and medium term fixed asset financing like plant, equipment, generators etc. Retail products like Car financing, Durable financing, Home Financing

DM - Application
Commercial Premises include Office premises, Factory premises, Warehouses, Shops, Agricultural land, excluding such: a- land or building which is being purchased for the purpose of resale (trading) b- land which cannot be used for construction or agricultural purposes c- land which is being purchased by the builders to carry out construction of commercial projects For details please see PDSC Policy 16 & 19.

Legal Documentation
1. Diminishing Musharakah Agreement Islamic Housing Finance Agreement Purpose: This is the main agreement that establishes Banks share in the Musharakah Property. Components: - Both parties share - Musharakah Property detail 2. Monthly Payment Agreement (Rent Agreement) Purpose: This agreement is signed after Main Musharakah Agreement. Bank gives our its share to the customer via this agreement. Components: - Rent Schedule - Formula of calculation

Legal Documentation
3. Undertaking to Purchase Musharakah Units Purpose: This is an undertaking by the customer to purchase Banks Musharakah units from time to time.. Components: - Normal Sale Price - Additional Unit Purchase Price 4. Undertaking to Sell Musharakah Units Purpose: This is an undertaking by the Meezan Bank to sell Banks Musharakah units in case of early unit purchase. Components: - Normal Sale Price - Additional Unit Purchase Price

Easy Home - Home Buyer

House Cost Price Customer Share Bank Share Profit Rate Tenure in Years 1,000,000 400,000 40% 600,000 60% 8.50% 5 Total Units Unit Sale Price Monthly Rent/Unit 60 10,000 70.83

Calulation Based on the Schedule as f

Months Rent Unit Price Monthly Payment Balance Unit Price Balance Units

0 1 2 3 4 5
56 57 58 59 60

4,250 4,179 4,108 4,038 3,967

354 283 213 142 71 129,625

10,000 10,000 10,000 10,000 10,000

10,000 10,000 10,000 10,000 10,000 600,000

14,250 14,179 14,108 14,038 13,967

10,354 10,283 10,213 10,142 10,071 729,625

600,000 590,000 580,000 570,000 560,000 550,000

40,000 30,000 20,000 10,000 0

60 59 58 57 56 55
4 3 2 1 -

THANK YOU