The term ‘Bai-Salam’ has been derived from Arabic words ‘ﻊﻴﺒ ’ and ‘ﺴﻠﻡ ’ (Bai’un and Salamun). The word ‘ﻊﻴﺒ’ means ‘purchase and sale’ and the word ‘ﺴﻠﻡ ’ means ‘advance’. ‘Bai-Salam’ means advance purchase and sale.

Bai-Salam may be defined as a contract between a Buyer and a Seller under which the Seller sells in advance the certain commodity (ies)/product(s) permissible under Islamic Shari‘ah and the law of the land to the Buyer at an agreed price payable on execution of the said contract and the commodity (ies)/product(s) is/are delivered as per specification, size, quality, quantity at a future time in a particular place.

In other words, Bai-Salam is a sale whereby the seller undertakes to supply some specific Commodity (ies) /Product(s) to the buyer at a future time in exchange of an advanced price fully paid on the spot.

Here the price is  paid in cash, but the delivery  of the goods is deferred


  • Bai-Salam is a mode of investment allowed by Islamic Shari‘ah in which commodity (ies)/product(s) can be sold without having the said commodity (ies)/ product(s) either in existence or physical/constructive possession of the seller. If the commodity(ies)/product(s) are ready for sale, Bai-Salam is not allowed in Shari‘ah. Then the sale may be done either in Bai-Murabaha or Bai-Muajjal mode of investment.
  • Generally, Industrial and Agricultural products are purchased/ sold in advance under Bai-Salam mode of Investment to infuse finance so that production is not hindered due to shortage of fund/cash.
  • It is permissible to obtain collateral security from the seller client to secure the investment from any hazards viz. non-supply/partial supply of commodity (ies)/product(s), supply of low quality commodity (ies)/Product(s) etc.
  • It is also permissible to obtain Mortgage and/or Personal Guarantee from a third party as security before the signing of the Agreement or at the time of signing the Agreement.
  • Bai-Salam on a particular commodity (ies)/product(s) or on a product of a particular field or farm cannot be affected. [for Agricultural Product(s) only].
  • The seller (manufacturer/producer) client may be made agent of the Bank to sell the goods delivered to the Bank by him provided a separate agency agreement is executed between the Bank and the Client (Agent).

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