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Business Banking

Financing:

The bank finances projects in the following manner :

The bank offers this method of financing in all sectors to promoters of new projects and to the owners of existing projects already in operation. Promoters submit technical and financial project studies to the bank which in turn evaluates them and ensures their feasibility. These projects are then approved and the equipment and, means of production financed by the bank which pays the suppliers the purchase price plus related costs. A contract leasing the equipment for a given period is signed with the promoter who becomes the owner upon expiration of the period in question. The bank is paid an annual rental fee representing part of the capital investment and a share in the profits, as provided in the contract.

The bank buys equipment and materials which it advances to promoters of projects by virtue of a contract in which provision is made for payment of the capital and profit by installments and stating the collateral required by the bank.

This is a common form of equity participation. The bank holds shares in the equity of companies that already exist or are in the process of being established. It also participates in the management of these projects through its representative on the Board of Directors. Participation may be permanent or degressive, in which case the bank is «bought out» by its partners using their share of the profits.

MURABAHA operations also include export financing providing foreign importers with the necessary financing for their imports. The financing period for MURABAHA varies from 6 to 18 months. The profit rate is set in accordance with the amount and duration of the operation and the currency used.

This is specific to BEST Bank and similar institutions. The bank participates in a given project by supplying the required capital and the promoter contributes his experience,and labor. The project must prove to be viable and give sufficient economic and financial returns. Profits are shared on the basis of preagreed percentages.