At LB Al-Salamah, we are proud to offer Diminishing Musharakah, a flexible and fully Shari’ah-compliant financing model that empowers you to acquire assets or fund projects without engaging in interest-based transactions. Built on the principle of partnership and gradual ownership transfer, Diminishing Musharakah is ideal for businesses and individuals seeking ethical financing solutions aligned with Islamic values.
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Diminishing Musharakah is a joint ownership financing arrangement where LB Al-Salamah (the financier) and the customer co-invest in an asset or venture. Gradually the client share in the asset increases through scheduled installment payments, while LB Al-Salamah’s share diminishes in the partnership. During the tenure, client pay a usage fee (rent) for the financier’s share in the asset, until full ownership is eventually transferred to the client.
- LB Al-Salamah and the customer jointly purchase the asset or fund the project.
- The customer gradually buys LB Al-Salamah’s share through periodic installment payments.
- The customer pays a usage fee for the financier’s share of the asset, calculated on the remaining ownership portion.
- Ideal for tangible assets such as property, machinery, vehicles, or even working capital needs.
- The client has the liberty to purchase the financier's share at any time without incurring additional charges.
- A top-up facility is available against the existing asset security, providing added financial flexibility.
- Working Capital Financing.
- Project Financing (e.g., infrastructure, construction).
- Asset Acquisition (e.g., property, vehicles, equipment).
- Business Expansion.
- LB Finance and the customer jointly invest in purchasing an asset or funding a project.
- The customer uses the asset and pays the rent based on LB Al-Salamah’s remaining share.
- The customer can gradually purchases LB Al-Salamah’s share in agreed installments.
- Upon completion of payments, the customer becomes the sole owner of the asset.
- Riba-Free (Interest-Free) financing.
- Transparent structure with clearly defined rent and ownership shares.
- Gradual asset ownership without debt-based obligations.
- Ideal for businesses and individuals with long-term growth plans.
- Encourages ethical entrepreneurship and asset growth.
