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Term

Glossary
1 Accrued Profit Profit earned but not received from the customer.
2 Acquirer Acquirers are banks and financial institutions that collaborate with businesses to accept credit/debit card payments.
3 Additional Unit Purchase Excess purchase of units in Diminishing Musharakah to reduce the bank’s share in the asset.
4 Advance Booking Booking of a vehicle with the manufacturer through advance payment.
5 Advance Rental Payment in the form of rent before the start of the lease term.
6 Agency-based contract for investments Relating to Islamic banks, refers to investment contracts where the investment account holders appoint the Islamic bank as agent for investing their funds for a specified fee and share of profit if it exceeds a certain level, the latter being an incentive for the Islamic bank to achieve a return higher than expected.
7 Agreement Stamping Charges Charges paid by the customer for stamping of financing agreement.
8 Amortization Schedule Information of Equal Monthly Installments (EMI) with break-up of principal and profit along with balance outstanding.
9 Annual Fee / Renewal Fee An annual fee typically charged to customers for credit/debit cards.
10 Applicable Rate Profit rate applied on the facility.
11 Application Form A form to be filled in and signed as per the bank’s requirements to avail banking facilities. Requirements will vary for each facility. Applications may also require certain specified documents to be attached.
12 Appraisal Agency Agency used for assessing market value of an asset.
13 Al-‘aqd Legal contract implying an enforceable act involving a bilateral declaration, namely, the offer (Ijab) and the acceptance (Qabul).
14 Ard al-waqf The land assigned to the welfare of the community either by the Islamic state, corporate bodies, or by individuals.
15 ATM An automated teller machine or any card-operated device belonging to the bank or other participating banks/financial institutions, or to the Visa/MasterCard global ATM network.
16 Auto Financing The financing facilities to purchase a vehicle for personal use.
17 Back-to-back Istisna (Parallel Istisna) A form of double Istisna contract where a company approaches an Islamic financial institution to provide finance for constructing a facility (e.g., power plant). The institution engages an engineering firm to construct it, and the difference in prices constitutes the profit or loss.
18 Al-bai‘ A contract of sale: sale of definite goods/property with free consent of parties for a definite price, involving proposal (Ijab) and acceptance (Qabul).
19 Bai‘ al-amanah A sale whereby both parties express trust in each other. Examples include bai‘ al-wafa, murabahah, etc.
20 Al-bai‘ al-batil An agreement of sale which is unlawful in substance and description.
21 Bai‘ al-dain Sale of debt for cash; must be at par value to comply with Shariah.
22 Bai‘ al-gharar Sale of a thing not in one’s possession nor expected to be under one’s control.
23 Bai‘ al-‘Inah A sale where a person sells an article on credit, then buys it back at a lower price for cash.
24 Bai‘ al-istijrar A sale where the buyer keeps taking goods as needed and settles payment later.
25 Bai‘ al-istisna A contract where the purchaser asks the seller to manufacture a defined product using seller’s raw materials at a set price, to be delivered at a specified time/place.
26 Bai‘ al-kali bil kali A type of credit sale where, on due date, the debtor seeks an extension with an agreement to pay extra.
27 Bai‘ al-khiyar Conditional sale giving buyer the option to annul the deal.
28 Al-bai‘ al-mu’ajjal A financing technique where payment for a commodity is deferred in lump sum or installments.
29 Bai‘ al-muqayadah Selling a commodity for another commodity.
30 Bai‘ al-murabahah Sale of goods with an agreed profit over cost.
31 Bai‘ al-musawamah Sale of goods at a mutually agreed price without disclosing seller’s cost.
32 Bai‘ al-salam A sale involving advance payment for goods to be delivered later.
33 Al-bai‘ bil takhir A sale where payment is deferred.
34 Bai‘ al-tawliyah A sale where the seller sells at his cost price.
35 Bai‘ al-wad‘iyah A sale where seller informs actual cost and offers a discount.
36 Balance Transfer (BTF) Balance transfer of an existing finance facility from another bank/DFI.
37 Balance Transfer Account An account opened in the customer’s name for the balance transfer facility.
38 Balloon Payment Payment exceeding installment amount to reduce principal outstanding.
39 Banker’s Lien Bank’s charge on the asset.
40 Bank Investment Ratio (BIR) Ratio of bank’s investment in an asset against its value.
41 Base Rate Benchmark rate for driving the pricing of a product or service.
42 Billing Cycle Date of the month when a bill or statement is generated.
43 BOQ (Bill of Quantity) Break-up of amount in construction cases.
45 BRP (Banker’s Ratio of Profit-Sharing) Percentage share of profit due to the financier in a mudarabah or musharakah-based enterprise.
46 Business Person Individual having his own business.
47 Buy-back A mode of financing where the bank purchases goods or property from a client and agrees to sell it back at a higher price, payable later.
48 Capital Contributions Additional funds collected from investors in an Islamic fund to meet future needs, without issuing new shares or units.
49 Capital Transactions Includes the sale of units/shares and reinvestment of distributions, less the value of returned units/shares.
50 Card A Visa, MasterCard, or other bank-issued card, including co-branded, debit, or supplementary cards.
51 Card Account A Visa/MasterCard account or other account pertaining to a bank-issued card, used for recording debits and credits.
52 Card Issuer A bank, financial institution, or agency that issues a card to the public or its members.
53 Card Member A person to whom the card is issued by the bank, including supplementary cardholders.
54 Card Replacement Fee Fee charged for replacement of a lost, stolen, or damaged card.
55 Card Transaction Any payment or debit made using the card for goods, services, or benefits.
56 CDs (Central Deposits) A proposed monetary policy tool where the central bank deposits created money in member banks for Shariah-compliant investments.
57 Certificate of Musharakah An Islamic financial instrument approved in Pakistan in April 1995.
58 Charges The amount payable to the bank under terms and conditions, including fees, charity, and service charges.
59 Charity Monetary help given to those in need; may be required from customers for late payments in Islamic banking.
60 Clean Limit Financing limit granted without any collateral or security.
61 Clear Title When property is free from disputes or encumbrances.
62 Closing Balance The amount payable or available as of the last working day of a period/month.
63 Co-applicant A person who signs a finance contract with the primary applicant, sharing repayment responsibility.
64 Collateral An asset pledged to guarantee repayment, e.g., property, gold, or sukuks.
65 Collector A bank employee responsible for collection and recovery.
66 Commingled Mudarabah A form of mudarabah where the bank invests both customer and its own funds, sharing profits proportionately.
67 Commodity Mudarabah A mudarabah where the capital is provided in the form of goods instead of cash.
68 Constant Musharakah A musharakah in which partners’ equity shares remain unchanged throughout the agreement.
69 Contract Price Total amount payable by the customer to the bank for an asset under musawamah/mudarabah.
70 Credit History A financial profile showing repayment behavior, debts, and obligations.
71 Credit Limit The maximum amount a customer can draw from an account, based on approval and creditworthiness.
72 Credit Murabahah A sale agreement with a profit over purchase price, payable in the future.
73 Credit Rating / Score Evaluation of credit risk, predicting a customer’s ability to repay.
74 Credit Risk The risk that a counterparty will default on payment obligations under Shariah contracts.
75 Cross Sell Selling a product to an existing customer.
76 Current A customer making all payments on time.
77 Customer A person availing any facility or product of a bank.
78 Al-dain al-mu’ajjal A debt in pre-Islamic times with an increase in amount against extended repayment time.
79 Dealership Vehicle provided through an authorized dealer.
80 Debt Ratio / Debt Burden A ratio comparing the amount owed to income, used to assess financing eligibility.
81 Default / Delinquency When a customer fails to make payments as per agreed terms; delinquency refers to unpaid rentals as per contract.
82 Delivery Acceptance Form A document signed by the customer confirming acceptance and possession of a vehicle from the dealer.
83 Desired Financing Amount Amount of financing requested by the customer.
84 Desired Financing Tenure Time period of financing requested by the customer.
85 Diminishing Musharakah A joint ownership arrangement where the bank’s share is gradually purchased by the customer until full ownership is achieved.
86 Direct Debit / Auto Debit Facility A facility allowing automatic debit of payments from a customer’s account on due dates.
87 Disbursement Payment made in the name of the customer.
88 Discrepancy Incomplete or contradictory information or documents in a financing application.
89 Dishonored / Returned Cheque A cheque returned unpaid due to reasons like insufficient funds, signature mismatch, or date issues.
90 Disputed Transaction A card transaction not accepted by the customer and requiring clarification.
91 DPD (Days Past Due) Number of days after the payment due date when payment remains unpaid.
92 Due Date / Payment Due Date / Installment Due Date Date by which the current balance or installment must be paid.
93 E-Alerts Electronic notifications sent via email or SMS.
94 Early Settlement Full repayment of financing before maturity as per payment schedule.
95 E-Banking / Internet Banking Banking transactions conducted online using a secure bank application.
96 E-CIB / Credit Bureau Electronic Credit Information Bureau established by the State Bank of Pakistan to track financing and advances.
97 Early Termination Charges Charges applied if a customer ends an Ijarah agreement before its term.
98 EMI (Equal Monthly Installments) Fixed monthly payments consisting of principal and profit portions.
99 Equity / Down Payment The customer’s contribution towards the value of a financed asset.
100 Expiry Date The date of expiry printed on a card.
101 External Agencies Third-party service providers on the bank’s approved panel.
102 Facility Rate / Pricing The profit rate charged on a product or service.
103 Fair Price A price determined through market forces within Shariah guidelines.
104 Fatwa A formal ruling by a Shariah scholar on an Islamic matter.
105 FCY (Foreign Currency Account) An account maintained in a foreign currency.
106 FED (Federal Excise Duty) A government tax levied on certain transactions or products.
107 Financing Agreement A document outlining terms between the customer and the bank.
108 Fixed Rate A profit rate set at the time of financing and unchanged for the facility’s tenure.
109 Fixed Term A product or service with a set lifetime, possibly incurring charges if altered early.
110 Floating Rate A profit rate that changes after a set period, often linked to KIBOR plus a margin.
111 FX Conversion Charges Charges for converting foreign currency transactions into PKR.
112 GCAS (Global Customer Assistance Service) Service offering global assistance to cardholders.
113 General Takaful Islamic insurance covering risks like fire, theft, or natural disasters.
114 Al-Gharar The sale of something with unknown outcome or excessive uncertainty.
115 Guarantee A promise by a guarantor to pay if the primary obligor defaults.
116 Hibah A gift given voluntarily without expectation of return.
117 Hypothecation The process of placing a lien or charge on a bank-financed asset.
118 Ijarah A leasing agreement where the bank buys an asset and leases it to the customer for a set period.
119 Ijarah Expense The rental installment paid by the lessee for leased assets.
120 Ijarah Revenue The rental installments received by a financial institution for leased assets.
121 Al-Ijarah wa al-Iqtina’ A financing mode where the bank leases an asset to the client with an undertaking to transfer ownership after full rental payment.
122 Al-Ijma’ Consensus of qualified jurists on a specific issue in a given era.
123 Al-Ijtihad Effort by a jurist to derive a law based on evidence from Islamic sources.
124 Income Estimation Agency Agency that assesses a customer’s income.
125 IVR (Interactive Voice Response) Technology enabling computers to interact with humans via voice or keypad input.
126 Internal Shariah Review An independent audit within an Islamic bank to ensure Shariah compliance.
127 Investment Assets Investments in financial instruments under Islamic modes.
128 Investment Risk Reserve Reserve set aside from investment income to protect against potential losses.
129 Islamic Banking Banking conducted according to Islamic principles, avoiding interest.
130 Islamic Credit Card A credit card structured in compliance with Shariah rules.
131 Istijrar An Islamic financing mode allowing gradual purchase of commodities with market-based pricing.
132 Al-Kafalah A surety contract where one party guarantees another’s obligation.
133 KIBOR (Karachi Interbank Offered Rate) The benchmark rate set monthly by the State Bank of Pakistan.
134 Lawyer Appraisal Agency Agency that verifies and appraises property documents.
135 Lease Facility A contractual arrangement for the use of an asset in exchange for payments.
136 Leasing Certificate An Islamic investment instrument linked to lease operations.
137 Liabilities Amounts payable by the customer to the bank.
138 Linked Account An account designated for making financing payments.
139 Litigation Charges Charges incurred when filing a legal case against a defaulting customer.
140 LOU (Letter of Understanding) A document outlining agreed terms between the bank and the customer.
141 Manufacturer The producer of a vehicle or asset.
142 Margin The bank’s profit percentage on financing.
143 Maturity The completion date of financing repayment.
144 Merchant A seller of goods or services who accepts card payments.
145 Money Mudarabah A Mudarabah contract where capital is provided in cash.
146 Month A calendar month used for calculating payments or tenures.
147 Mortgages Transfer of interest in property to secure repayment obligations.
148 Al-Mu‘amalah Lease of land or fruit trees for money or a crop share.
149 Mudarabah Certificate A financial instrument issued to raise funds for investment under Mudarabah.
150 Al-Mudarabah al-Mutlaqah An unrestricted Mudarabah allowing the entrepreneur full discretion in trade decisions.
151 Al-Mudarabah al-Muqayyadah A restricted Mudarabah with specific conditions set by the capital provider.
152 Mudarabah Shares Instruments issued to raise funds for projects on a profit-sharing basis.
153 Al-Mudarib The working partner or entrepreneur in a Mudarabah contract.
154 Musawamah A general sale where price is agreed without reference to the seller’s cost.
155 Al-Musha‘ Joint ownership of an asset by more than one party.
156 Mustajar The object of a hiring contract.
157 Mustajir The leaseholder or tenant in a leasing arrangement.
158 NCCA (Non-Checking Account) An account allowing deposits but no withdrawals or instruments.
159 NOC (No Objection Certificate) A certificate issued after financing clearance.
160 Object Deferred Sale Another term for Bai‘ al-Salam, where payment is made in advance and delivery occurs later.
161 Off Us ATM A transaction conducted at another bank’s ATM.
162 On Us ATM A transaction conducted at the issuing bank’s ATM.
163 Operating Ijarah An operating lease without a promise to transfer ownership at the end of the term.
164 Outstanding Balance Any unpaid amount under a financing facility.
165 Overdue Rentals / Late Payments Amounts not paid by their due date, potentially subject to charity.
166 Parallel Salam A Bai‘ al-Salam where the institution resells the purchased goods under another Salam contract.
167 Participatory Istisna’ A finance mode combining Istisna’ with Musharakah elements.
168 Payment Facility The bank’s service to pay amounts or bills on behalf of the customer.
169 PIN / ATM PIN Personal Identification Number used for ATM transactions.
170 Pre-Payment / Early Settlement A one-off payment made to settle financing before maturity.
171 Prepayment Charges Charges applied for early repayment of a facility.
172 Price and Object Deferred Sale A sales contract where both price and delivery are deferred, permissible in Istisna’.
173 Principal The financing amount provided by the bank.
174 Processing Fee A one-time fee charged for processing an approved facility.
175 Profit-Sharing Deposits Deposits placed under profit-sharing arrangements, free from interest.
176 Progressive Letter Details provided by a cardholder to support a disputed transaction case.
177 Provision A contra-asset entry representing allocated expenses against potential losses.
178 Purchase Order An order issued by the bank to a dealer for asset purchase confirmation.
179 Al-Qard al-Hasan An interest-free loan requiring only the principal to be repaid.
180 Al-Qimar An agreement involving gain/loss based on uncertain events (gambling).
181 Al-Qiyas Deriving law through analogy with an established ruling.
182 Al-Rahn To pledge property as security for a debt.
183 Rate Revision Letter A letter informing customers of revised profit rates.
184 Ready Delivery A vehicle available immediately after payment.
185 Ready Delivery Used A used vehicle ready for immediate delivery upon payment.
186 Receivables Amounts due from clients as a result of Islamic financing sales.
187 Registration Charges Fees for registering a vehicle with the Excise and Taxation Office.
188 Rental Payment Payment made by a lessee for asset use.
190 Reserves A component of equity created from income appropriations.
191 Restricted Investment Account An account where funds can only be invested under set restrictions.
192 Payment Period The tenure of a financing facility.
193 Repossession Taking back an asset due to default; duplicate definition noted.
194 Residual Value The value of an asset after the Ijarah term ends.
195 Revolving Mudarabah A credit line-like facility allowing repeated withdrawals under Mudarabah.
196 Riba al-Duyun A term referring to Qur’anic Riba or Riba al-Nasi’ah.
197 Al-Riba Increase in a loan without equivalent counter-value (interest).
198 Riba al-Fadl Unequal exchange of the same commodity, prohibited under Shariah.
199 Riba al-Nasi’ah Increment charged on a loan for extending repayment time.
200 Right of Set-Off The bank’s right to recover dues from any of the customer’s accounts.
201 Rupee / PKR Pakistani Rupee, the official currency of Pakistan.
202 Salaried Individual A person employed on a fixed salary basis.
203 Sale Order Confirmation document sent to customers before vehicle delivery.
204 Schedule of Charges A document listing all fees and charges applicable to banking products and services.
205 Secured Limit A financing limit secured against collateral or securities.
206 Security The bank’s collateral against a financing facility.
207 Self-Employed Professional An individual operating their own professional business.
208 Semi-Commercial Vehicles usable for both personal and commercial purposes.
209 Service Establishment A merchant acquiring bank authorized to accept card transactions.
210 Service Fee / Annualized Percentage Rate (APR) Fees payable on outstanding liabilities as per the Schedule of Charges.
211 Shari‘ah Audit An audit assessing compliance with Shariah principles.
212 Shariah Board A committee of Islamic scholars guiding and supervising an Islamic bank.
213 Al-Shirkah A partnership contract to conduct business and share profits.
214 Shirkah al-‘Abdan A partnership based on joint labor or skills without capital.
215 Shirkah al-‘Amwal A partnership where all partners contribute capital and labor.
216 Shirkah al-‘Aqd A business arrangement where capital and profits are shared among partners.
217 Shirkah al-Milk A proprietary partnership from joint ownership of property.
218 Shirkah al-Mufawadah A partnership where all partners are equal in equity and rights.
219 Al-Shirkah al-Mutanaqisah A diminishing partnership in an income-generating asset or venture.
220 SMS Fee Charges for SMS notifications.
221 Standing Instructions / Auto Debit Written instructions to debit a customer’s account on a set schedule.
222 Statement of Account The bank’s periodic statement showing all account transactions.
223 Suit Legal case filing against a customer.
224 Supplementary Card An additional card issued with the consent of the main cardholder.
225 Supplementary Card Member The holder of a supplementary card.
226 Al-Tabarru‘ The right of complete disposition over personal property.
227 TPIN Telephone Personal Identification Number for phone banking services.
228 Takaful Islamic insurance based on mutual assistance.
229 Takaful Contribution The amount paid to a Takaful company as Tabarru‘.
230 Takaful Premium The amount paid to a Takaful company for coverage.
231 Takaful Products Products providing protection against unforeseen events.
232 TAT – Turn Around Time Time required for application processing.
233 Temporary Credit Short-term credit posted to a card account during dispute resolution.
234 Tenure The duration for which a term finance facility is approved.
235 Time-Barred Transactions Transactions disputed after the allowable time limit.
236 Title of the Property Documents proving property ownership.
237 Title of Vehicle Documents proving vehicle ownership, such as registration papers.
238 Top-Up Enhancement or replenishment of a financing limit.
239 Total Cash Outlay (TCO) Total upfront payment including down payment, Takaful, and fees.
240 Total Monthly Payment (TMP) Equal monthly amount including principal, profit, and Takaful.
241 Tranches Facility disbursements made in multiple parts.
242 Undertaking An indemnity provided by the customer.
243 Units Undivided portions in an asset.
244 Unrestricted Investment Account An account allowing the bank full discretion in fund investment.
245 Unsatisfactory Credit History A record showing failure to repay bank facilities.
246 US Dollar The currency of the United States of America.
247 Validity Date The date until which a card is valid.
248 Al-Wakalah A contract of agency where one person acts on behalf of another.
249 Al-Waqf The permanent dedication of property for charitable purposes.
250 Waqif The person who establishes a Waqf.
251 Withdrawal Facility The ability to withdraw cash using a debit card or ATM.
252 Al-Zakah (Zakat) A mandatory tax on wealth above Nisab for redistribution to the needy.
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