Risk Management and Istishna’ Agreement Financing Products In Sharia Financial Institutions

Manajemen Risiko dan Produk Pembiayaan Akad Istishna’ dalam Lembaga Keuangan Syariah

Abstract

This research aims to examine istishna' products and risk management in implementing the istishna' contract. Sharia Financial Institutions (LKS) have an important role in providing financial services in accordance with sharia principles, one of which is through financing products. The istishna' contract is a form of contract used in LKS financing products. Istishna' is an agreement between two parties, namely the buyer (mustashni') and the seller (shani'), to order goods with certain specifications that have been mutually agreed upon. In this case, the seller is responsible for providing the goods ordered, while the buyer is obliged to pay for the goods. Istishna' financing contracts are used to fulfill various procurement needs for goods that are the object of istishna'. This agreement includes an installment period that can extend beyond the period of procurement of goods, where the bank will recognize the income that is entitled to it during the installment period. This article aims to provide a deeper understanding of financing products in istishna' contracts and the risk management applied in this context.