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The emergence of Islamic banking (or also known as Shariah banking) in recent decades is one of the most important trends in the financial world. There has always been a demand among Moslem for financial products and services that conform to the Shariah (Islamic law).

HSBC Amanah applies a variety of Islamic financial instruments to develop its products. Often the same instrument is used in a variety of products, each product meeting the needs of a different type of customer. This section presents the three most common Islamic financial instruments and illustrates their uses in representative products offered by HSBC Amanah. Each instrument is explained with a definition, an overview of the transaction process and its illustration in a representative HSBC Amanah product.

Mudarabah

A Mudarabah transaction is an investment partnership. In a Mudarabah arrangement, the contract is between an investor (or financier) and an entrepreneur or investment manager known as the mudarib.

Murabahah

A Murabahah transaction is a sale at a stated profit. In a Murabahah transaction, the bank purchases something from a third party and sells it to the client at a stated profit on a deferred payment basis.

Ijarah

An Ijarah is an Islamic lease. The bank purchases an asset and leases it to a client for fixed monthly payments.