Bay Salam: A Proposed Model for Shari’ah Compliant Agriculture Financing

Abstract

This study focuses on the discussion of Salam financing and its prospects in agriculture sector of Pakistan economy. For this purpose, a model of Salam financing is proposed. This model can be used for a single-season crop financing as well as for multiple-seasons crop financing; though the multiple crop finance is relatively complex to execute. Prima-ry objective of the model is the elimination of middleman involvement and specifically addressing problems faced by the small scale farmers. The study also discusses a brief comparative note on the Salam models proposed in the literature and their problems. Risks associated with the proposed model of this study are also mentioned in detail along with their mitigation procedures.