IJARAH

❓ DEFINITION ❓

⭐ MAIN FEATURES ⭐

👥 PARTIES INVOLVE 👥

✅ APPLICATION ✅

a lease contract that transfers the ownership of a usufruct of an asset to another person for a specified time in exchange for a specified consideration

binding contract

shall not be terminated unilaterally by any of the contracting parties unless otherwise provided in this policy document

👤 lessor

👤 lessee

👤 agent (wakil) may involve

a hire contract to employ a person with wages paid to him as a consideration for his services.

⚠ the contracting parties

⚠ ijab (offer) and qabul (acceptance);

⚠ rental

offer and acceptance may be expressed orally, in writing or by any other method recognized by Shariah.

⚠ the asset and usufruct

recognized by Shariah

valuable

in existence

identifiable

accessible

deliverable

not a debt-based asset

non-perishable

shall be owned by the lessor

shall be determined and agreed by the contracting parties at the inception of the ijarah contract

  1. The customer visits the Islamic bank and applies for leasing facility.
  1. The Islamic bank purchases the asset from the supplier and pays the full amount according their bargaining.
  1. The customer and Islamic bank enter into ijarah contract in which they agree on terms and conditions of ijarah and specify the period of lease and rental amount.
  1. During the period of lease, the title of ownership remains with lessor and the lessee has the right to use the assets.
  1. In a normal lease, the asset is returned to lessor at the time of completion of lease period.
  1. In the case of ijarah muntahia bittamleek, the ownership title of the asset is transferred to the lessee either thorough sale or gift.