The terms ‘Bai’ and ‘Salam’ have been derived from Arabic words ‘ﻊﻴﺒ’ andﺴﻠﻢ'’. The word ‘Bai’ means ‘Sale and purchase’ and the word ‘Salam’ means ‘advance’. ‘Bai-Salam’ means ‘advance sale and Purchase’

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 Shariah 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.