Istisna is widely used by Islamic banks and financial institutions to finance the construction of real estate such as buildings, warehouses, showrooms, shopping malls, residential towers and villas, as well as manufacturing activities involved in the construction of like aircrafts, ships, machines and equipment, etc.
Istisna is generally a long-term sales contract between a customer and the bank, whereby Persian Gulf Commercial Bank agrees to construct and deliver an asset at a pre-determined future time, at an agreed price. The bank takes care of paying the contracted developer or builder in full or at specific stages of project completion. The client then pays the bank as per agreed payment plan. The customer then pays the bank either in installments, at delivery or after project completion.
