Salam

Salam is a sale whereby the seller undertakes to supply some specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot in cash, but the supply of the purchased goods is deferred.

In Islamic Banking, Salam is used for customers who wish to sell the commodities (the quality and quantity of which can be specified exactly) in advance so that after receiving their cash price, they can utilize the generated funds in their business. Salam is beneficial to the seller because the price is received in advance and it is also beneficial to the buyer since the price in Salam is lower than the price in spot sales.