Salam Contract in Islamic Banking and Finance - Definition, Types and Examples of Salam | AIMS UK

Salam Contract is an Islamic finance contract that allows businesses to raise working capital in a Shari'a-compliant manner. The Salam Contract is structured as follows: the business sells goods to the financier at an agreed-upon price, with delivery of the goods to take place at a later date. The business then uses the funds from the sale to purchase the required inventory and pay any other necessary costs. When the goods are delivered to the financier, they are sold at the original agreed-upon price, minus any financing charges. As a result, the business is able to obtain the financing it needs in a way that is consistent with Islamic law.

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0:00 Introduction
0:16 Definition of Salam
0:51 Elements in Salam Transaction
1:15 Background of Salam
2:16 Applications of Salam
2:28 Salam as a Mode of Finance
3:32 Mechanism of Parallel Salam
4:09 Benefits of Salam
4:48 Conditions for Salam
6:05 Difference between Salam and Murabahah