Ijara and Its Contemrary Aplication in Islamic Banking
Islamic Finance
June 2010 www.globalislamicfinancemagazine.com
G LO B A L
demand interview with
UK:£8.00
Vast and unmet
Mutual Funds & Wealth Management:
Islamic
John Sandwick
Structure features in Shari’ah-Compliant Project financing: Case Study-based Part I P. 12 Brand New Way: Selling Islamic Finance to NonMuslims. Part II-Marketing and Selling
Ba nc al hic ina Et & F ing nk e
Sharia’a-Compliant Investing-Many Happy Returns? P. 60
P. 42
gif
Principles of Islamic Finance
IJARAH AND ITS CONTEMPORARY APPLICATIONS IN ISLAMIC BANKING
AUTHOR: DR. MUFTI MUHAMMAD MUSHTAQ AHMED
28 Global Islamic Finance
June 2010
Principles of Islamic Finance
gif
I
is necessary to specify the rent for the first period and the rent of the subsequent period of Ijara and this must be linked with a certain benchmark. Such benchmarks can have a ceiling and floor but should be based on a clear formula with the consent of the customer. 4. The leaser cannot increase the rental for any phase unilaterally. It can be mutually agreed in the agreeIn Islamic terms there is no restrictions of using Ijara ment that the rental will be increased by a specified as a banking product. But there are some conditions amount/proportion after specified intervals. which must be followed by the Product Development De- 5. All liabilities emerging from ownership are borne by partment of IFI while using simple Ijara as a product or the leaser. Thus, maintenance of the asset, other structuring any product containing Ijrah because without than routine operation expenses, during the lease keeping in view all these conditions, the product may beperiod is the responsibility of the bank, the owner come non Shariah Complaint. of the asset, as the benefit (rental) is linked to the responsibility. The lessee can be made liable to the In this article we will define Ijara, the basic rules of Ijara wear and tear that normally occurs to the asset durin Shariah and the most
June 2010 www.globalislamicfinancemagazine.com
G LO B A L
demand interview with
UK:£8.00
Vast and unmet
Mutual Funds & Wealth Management:
Islamic
John Sandwick
Structure features in Shari’ah-Compliant Project financing: Case Study-based Part I P. 12 Brand New Way: Selling Islamic Finance to NonMuslims. Part II-Marketing and Selling
Ba nc al hic ina Et & F ing nk e
Sharia’a-Compliant Investing-Many Happy Returns? P. 60
P. 42
gif
Principles of Islamic Finance
IJARAH AND ITS CONTEMPORARY APPLICATIONS IN ISLAMIC BANKING
AUTHOR: DR. MUFTI MUHAMMAD MUSHTAQ AHMED
28 Global Islamic Finance
June 2010
Principles of Islamic Finance
gif
I
is necessary to specify the rent for the first period and the rent of the subsequent period of Ijara and this must be linked with a certain benchmark. Such benchmarks can have a ceiling and floor but should be based on a clear formula with the consent of the customer. 4. The leaser cannot increase the rental for any phase unilaterally. It can be mutually agreed in the agreeIn Islamic terms there is no restrictions of using Ijara ment that the rental will be increased by a specified as a banking product. But there are some conditions amount/proportion after specified intervals. which must be followed by the Product Development De- 5. All liabilities emerging from ownership are borne by partment of IFI while using simple Ijara as a product or the leaser. Thus, maintenance of the asset, other structuring any product containing Ijrah because without than routine operation expenses, during the lease keeping in view all these conditions, the product may beperiod is the responsibility of the bank, the owner come non Shariah Complaint. of the asset, as the benefit (rental) is linked to the responsibility. The lessee can be made liable to the In this article we will define Ijara, the basic rules of Ijara wear and tear that normally occurs to the asset durin Shariah and the most