ses it to him for an agreed period ad at the end of that period the lessee pays the balance on the price agreed at the beginning and becomes the owner of that item.3. Hire purchase where the bank buys an item for the client and hires it to him for an agreed rent and period and at the end of that period the client automatically becomes the owner of the item.4. Sell-and-buy-back where a client sells one of his properties to the bank for an agreed price payable now on condition that he will buy the property back after a certain time for an agreed price.5. Letter of Credit where the bank guarantees the import of an item using its own funds for a client, on the basis of sharing the profit from the sale of this item or on a mark-up basis.Lending:The main forms of lending are:1. Loans with a service charge where the bank lends money without interest but they cover their expenses by levying a service charge. This charge may be subject to a maximum set by the authorities.2. No-cost loans where each bank is expected to set aside a part of their funds to grant no-cost loans to needy persons such as small farmers, entrepreneurs, producers, etc. and to needy consumers.3. Overdrafts are also provided and are subject to a certain maximum. Free of charge or small fee.It should be noted that Islamic banks are not active in lending like conventional banks because they are not interest based. The point to be noted is that lending in an Islamically acceptable form is not very profitable to the back and they therefore have to resort to other 'lending' related practices, such as leasing and mark-up transactions. Islamic bonds are becoming very popular and Malaysia and Bahrain are currently developing a global Islamic bond market. Services:Other banking services such as money transfers, bill collections, trades in foreign currencies at spot rates etc, where the bank's own money is not involved are provided on a commission or charges basis. Many Islami...
