Salam Financing is a forward sale contract whereby the seller undertakes to supply some specific goods to the buyer at a definite future date in exchange for an advanced price fully paid at spot. It deals with future delivery of agricultural products and crafts at the place, quality and amount specified in the pre-agreed contracts between the bank and the customer.

• A trader in need of short-term funds sells commodity to the bank on a deferred delivery basis and easily gets working capital;
• Insurance (Takaful) coverage is needed to ensure risk mitigation system;
• The bank may get into parallel Salam for the same commodity with third party or may sell the commodity in the market at the prevailing price;
• It receives full price of the merchandise on the spot that serves its financing need at present;
• The Bank may ask collateral for this kind of service.