Salam

In Salam, the seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid on spot. Though the payment is made on spot, the supply of purchased goods is deferred. It is also applied to a mode of financing adopted by Islamic banks. It is usually applied in the agricultural sector where the bank advances money for a homogenous product like wheat, cotton, rice etc. It is a perfect tool for farmers for their working capital to produce goods.