Application of Salam (Forward sale) Contract: Lessons Learnt from Jurisdictions Adopting It

Adlin Izyana Jaafar, Hamizah Mohd Khusairi, Aishath Muneeza


Most of the Islamic banks are still reluctant to use salam to structure products. Salam is an exceptional sale contract in shariah which is a forward sale. Even though the objective of Salam is to aid the small entrepreneurs in different industries, financing them would expose these financial institutions to numerous risks like market risk, operational risk, subject matter risk and default risk. This study attempts to analyze the practice of Salam in Sudan, Pakistan and Iran. This is a library-based research, where documents and materials regarding the practice of Salam in Sudan, Iran and Pakistan are analyzed. The findings of this research reveals that different countries have innovated different approaches to implement Salam to suit their current needs and other jurisdictions can learn ways in which Salam contract could be used via this research.


Iran, Islamic Finance, Pakistan, Salam, Sudan



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