TRANSACTION IN ISLAMIC BANKING & FINANCE
FACULTY OF BUSINESS AND MANAGEMENT OF SCIENCES
Muhammad Hibatul Hakimi b Haji Suhaili (10B0911)
Basis of Ijarah 2
Essential elements of ijarah contract 2
Modus Operandi 3
3 Selected Banks 4
An Islamic alternative to conventional leasing is ijarah. Ijarah is a derivative of the Arabic words ‘ajr’ and ujrah which means consideration, return, wages, or rent. Generally, Ijarah means to give something on a rental basis or wages.According to muslim scholars such as hanafi, maliki and shafiee.
Definitions of ijarah according to Hanafi, it is a contract which enables possession of a particular intended usufruct of the leased asset for a consideration.
Definitions of ijarah according to shafiee, it is a contract which relates to permissible usufruct liable to utilization and accessibility for a particular recompense
Definitions of ijarah according to Hambali, it is a contract for a particular permissible usufruct which is taken gradually for a particular period and a particular consideration.
The practice of Ijarah takes place in a contract between two parties which is the lessor and lessee where the lessee gets the benefits of a specific service or specific asset owned by the lessor on specified consideration or rent. In al-ijarah services, the lessee is called musta’jir, the lessor is called ‘ajir and the wage or salaries is called ‘ujrah. Under Islamic jurisprudence, in terms of definition ijarah has two types which is ijarah ‘amal and ijarah ‘ain which will be explained in two different situations.
Ijarah ‘amal : it means to employ the services of a person and wages paid as a consideration for the services rendered. For example, X Islamic bank hires Dr Z as a manager on a monthly salary of $7000. In this case, X Islamic bank is mustajir, Dr Z is ajir and $7000 is ujrah. This type of ijarah... [continues]
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