When does the client invoice the bank?

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh

We have browsed through the Dubai Islamic Bank Salam Finance Page. We understand that the client purchases sugar upfront from Khaleej Sugar Refineries under the concept of “Salam”. The client then re-sells the sugar to Dubai Islamic Bank via an agent.

The information provided on the website is not complete and unclear. Kindly provide the following information in order for us to issue a specific ruling:

1. Terms and conditions

2. How does the client and bank take possession of the sugar? Physical possession or constructive possession?

3. How are the two transactions separated? (Salam between the client and sugar company and the purchase and sale with Dubai Islamic Bank and the client)

4. Is the commodity (sugar) ever insured?

5. When does the client invoice the bank? Before or after possession of the sugar?

And Allah Ta’āla Knows Best

Ismail Desai,

Darul Iftaa

Checked and Approved,

Mufti Ebrahim Desai.