1. Arbaz Bank provides leasing facilities to both retail and business customers. A bank client applies for Ijara Wa Tqtina to acquire specialized equipment for its food processing business. Assume that the total cost to the bank to purchase, deliver and setup the equipment at the clients premises is $ 50,000. The total lease period agreed is 5 years and the agreed profit rate for the facility is 6 % per annum.

Required:

a. Calculate the total lease rentals.(2.5 Marks)

b. monthly lease payment the client is required to make (2.5 Marks)

2. Explain how an Islamic bank gets involved in a Salam and a parallel Salam contract, discuss the parties and the differences of these two contracts.(5 Marks)

3. Describe the process involved in Istisna and parallel

Istisna contract ( 5 Marks)

4. Give a brief discussion on Performance risk and Credit risk of banks associated with Istisna.(5 marks