What is the meaning of Bai- Salam?
Ans: Bai- Salm has two
words. One” Bai” and another one is “ Salam”. “Bai” means “ sales and purchase”
and “ Salam” means advance sale and purcahse.
Question:
How to define Bai- Salam?
Ans: Bai-salam defined as a contract or agreement with a
buyer and seller in which the seller is sold in advance the certain commodity
(ies)/ products(s) permissible under Shairah and law of land to the buyer as
per terms and conditions of agreement. And the merchandise/ commodity (ies)/
products(s) is/are delivered as per specification, size, quality at a future
time in a specific place.
We can say in other words, Bai-salam is an advance buying
and selling procedure which is allowed
by the shariah principle. In this mode, commodity (ies)/ products(s)/ goods are
supplied after a specific time (in future) but the payment/exchange is made ob
spot (i.e. at present).
In a nutshell, Bai-Salam is that type of procedure where
the price is paid in cash, but the delivery of goods is deferred
Question:
What are the feature of Bai- Salam?
Ans
: Important features of Bai- Salam are given bellow:
1) In this mode, the seller can
sold the goods without having the physical possession.
2) If the goods are ready for
sales, Bai-salam mode is not allowed by the Islamic Shariah Principle.
3) Generally, this mode is used
to meet up the urgent need of the shortage of fund/cash of Industrial and
Agricultural products.
4) It is permissible to obtain
collateral security to minimize the risk of investment.
5) It is also permissible to
obtain mortgage or personal guarantee from the third party as security at the time of signing agreement
or before the signing of the agreement. \
6) The seller (manufacturer)/
client may be made agent of the to sell the goods delivered to the bank by him
provided a separate agency agreement is executed between the bank and the
client (Agent ).
7) This mode is used for only
agricultural product.
8) Detailed specification of
the goods must clearly mentioned in the contract to avoid ambiguity.
9) The exact time and place of
delivery must be specific.
10) Mode of transportation, transport costs,
storage charge/ godown rent, insurance etc if any (who will bear) must
specified in the contract.
11) All risk and responsibility
on the seller or client, if any loss arises, the seller must payback the value
of commodities/products.
12) It is not necessary to
mention cost of commodities/products and profit separately in the contracts;
only purchase price may be mentioned.
13) The seller shall responsible
for maintaining quantity, quality, and specification of the commodities/
products until making physical/constructive delivery of the same to the buyer.
Procedure of Bai-Salam investment in Export oriented industries
a)
This mode of investment may be allowed after opening
of back to back L/C, arrival of raw materials, shipment of raw materials etc.
b) The bank may sell/export it
goods through the seller/exporter (client) under a separate agreement or this
may be done dully incorporating in the Bai-Salam Agreement unless otherwise
settled and prescribed.
c)
The price of the Bai-Salam deal shall be fixed up keeping in view the
export/sales price mentioned in the relative export L/C/contract, the bank
shall fix up its profit as per rate prescribe by the head office time to time.
The following Accounting entries shall be passed at
various steps of Bai-Salam Investment:
Step One:
When bank as Bai-Salam purchaser make advance
payment to the client
(Producer/Manufacturer /supplier) against purchase
of a certain quantity/number of goods a per Bai-Salam Agreement:
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Dr.
|
Bai-Salam Investment A/C No. ......of M/S.....(Client’s name)
|
|
Cr.
|
Payment Order/Demand Draft/ TT a favoring to the
client or Current account of the client.
|
[
Being the
amount paid for purchase of .............units of .........under Bai-Salam mode
of investment from M/S............for ultimate sale/export of the same as per
Bai-Salam Agreement.]
Step
Two:
After
export/sale, when the client (Producer/Manufacturer
/supplier) submits the bills either foreign or local to the bank and if the
bank purchases or negotiates the same:
|
Dr.
|
FBP/FBN/IBP
Account of M/S. .... (Producer/Manufacturer /supplier)
|
|
Cr.
|
Bai-Salam
Investment A/C No. ......of
M/S.....(Client’s name)- to the extent of outstanding liability
|
|
Cr.
|
Investment
A/C (Bai-salam) (ensuring prescribed Rate of Return fixed by HO.)- to the
extent of profit as per Agreement.
|
|
Cr.
|
F.C. held against B.B. Bills
|
|
Cr.
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Various
Investment A/Cs liability
|
|
Cr.
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Current
Account No...........M/S ......( Client Producer/ Manufacturer/Supplier)(
Being the sales proceeds of the balance/ remaining items/goods after
adjustment of client’s liability, if any, due to the bank including profit)
|
Step
Three:
When Export/Sales proceeds is realized:
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Dr.
|
Bank’s
General (ID) Account
|
|
Cr.
|
FBP/FBN/IBP
Account of M/S. .... (Producer/Manufacturer /supplier)
|
|
{Being
amount of FBP/FBN/IBP Account (export proceeds) realised}
|
NB: Any other entries regarding FBP/FBN to be passed as
per instruction/circular issued/ to be issued by ID from time to time.
Step
Four :
After
export/sale, while the client (Producer/Manufacturer /supplier) submits the bills
either foreign or local to the bank and if the bank sends of the same for
collection:
No entry for Bai-Salam investment but contra
liability vouchers is to be passed regarding FBC as per instruction/circular
issued/ to be issued by ID from time to time.
While
the proceeds of Bills sent for collection is realised:
Step
Five :
1.
|
Dr.
|
Bank’s
General (ID) Account
|
|
Cr.
|
Bai-Salam
Investment A/C No. ......of
M/S.....(Client’s name)- to the extent of outstanding liability
|
|
Cr.
|
Investment
A/C (Bai-salam) (ensuring prescribed Rate of Return fixed by HO.)- to the
extent of profit as per Agreement.
|
|
Cr.
|
F.C. held against B.B. Bills
|
|
Cr.
|
Various
Investment A/Cs liability
|
|
Cr.
|
Current
Account No...........M/S ......( Client Producer/ Manufacturer/Supplier)
(
Being the sales proceeds of the balance/ remaining items/goods after
adjustment of client’s liability, if any, due to the bank including profit)
|
(Being
the proceeds of FBC No....against the bills submitted by the client (Producer/
Manufacturer/Supplier realised).
2.The contra entry passed
earlier while sending the bills on collection to be reversed.
If the client delays in
production /delivery /supply/sale/export the goods and if fine is charges as
per contract:
|
Dr.
|
Bai-Salam
Investment A/C No. ......of
M/S.....(Client/ Producer/Manufacturer/Supplier)
|
|
Cr.
|
Investment
Income A/C
(Being
the amount recovered of fine charged for the delayed period as per contract.)
|
If the client fails to
produce /delivery /supply/sale/export the goods, Bank will realise the amount
along with fine passing the following entries:
|
Dr.
|
Current
A/C No..... of the Client/ Producer/Manufacturer/Supplier)
|
|
Cr.
|
Bai-Salam
Investment A/C No. ......of M/S.....(
Client/ Producer/Manufacturer/Supplier))- to the coverage of outstanding
liability
|
|
Cr.
|
Investment
Income A/C-to coverage fine amount.
(Being
the amount recovered/realized for closing the Bai-Salam Investment A/C of the
client along with fine as per contract)
|
If the investment A/C becomes
classified as SS/DF, the following entries shall be passed for the Investment
Income/Fine accrued for the period from the beginning of the year to the date
of classification (for the unclassified/overdue period of the year). If it is
classified as Bad/Loss (B/L) accounting of investment Income/ Fine must be
stopped
(as
per Instruction of Bangladesh Bank i.e. central Bank)
|
Dr.
|
Bai-Salam
Investment A/C No. ......of M/S..... (Client/ Producer/Manufacturer/Supplier)(
for the classified period)
|
|
Dr.
|
Investment
Income A/C (for the unclassified overdue period of the year)
|
|
Cr.
|
Fine
Suspense A/C (Bai-Salam)
(Being
the amount recovered of fine transferred to fine suspense A/C against
classified Bai-Salam Investment A/C No......of M/S..........)
|
At the time of filing suit
for recovery of B.L. Classified Investment, the following entries shall be
passed. Every effort be exhausted for disposal of Asset/Property, if any, under
Bank’s custody before filing the suit.
(i)
|
Dr.
|
Bai-Salam
Investment A/C No. ......of M/S..... (Client/
Producer/Manufacturer/Supplier)( for the classified period)
|
|
Cr.
|
Fine
Suspense A/C (Bai-Salam)
(Being
the amount of fine accrued for B/L classified period not charged earlier, now
charged)
|
(ii)
|
Dr.
|
a) Suspense A/C : Court Fee
b) Expenditure A/C : Legal
Expenses
|
|
Cr.
|
Payment
order / A/C of the lawyer
(Being
the amount paid to the lawyer for court fees and lawyer charges and other
related expenses for filing suit)
|
while
Recovery /Deposit is made from/ by the client after filing suit, the following
entries shall be passed:
|
Dr.
|
Cash/
Current A/C No. ......of the client/
Producer/Manufacturer/Supplier
|
|
Cr.
|
Bai-Salam
Investment A/C No......of M/S.... the
client/ Producer/Manufacturer/Supplier
(Being
the amount paid/deposited by the Investment client after filing suit)
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