Salam naturally fits agriculture because the farmer often needs money before the crop is ready. A financial institution can pay in advance for clearly specified produce and receive the commodity later.
The institution's potential profit comes from buying through Salam at an agreed advance price and later selling the delivered commodity in the market—not from charging interest on money advanced.
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Advance-Purchase Sale (سَلَم): Availability, Delivery Time and Financing Use
Salam naturally fits agriculture because the farmer often needs money before the crop is ready. A financial institution can pay in advance for clearly specified produce and receive the commodity later.
The institution's potential profit comes from buying through Salam at an agreed advance price and later selling the delivered commodity in the market—not from charging interest on money advanced.