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Documente Cultură
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Difference between Aa’riyah & Ijarah
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AAOIFI Standards
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Basic Rules of Ijarah
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Basic Rules of Ijarah
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Liabilities of Parties
Lessor Responsibilities:
Since corpus of leased property remains in
the ownership of the lessor therefore all major
liabilities of ownership are borne by lessor.
Expenses:
As the lessor is the owner of the asset he is
liable to pay all the expenses incurred in the
process of its purchase and its import to the
country of the lessor example expenses of
shipment and customs duty etc.
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Lessee Responsibilities:
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Lessee as Ameen:
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Rental
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Termination: contractual
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Termination: contractual
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Ijarah AS A MODE OF FINANCING
GENERAL DEFINITION
Ijarah is the transfer of ownership of a service for an
agreed upon consideration.
Operating Ijarah do not end up with the transfer of
ownership of leased assets to the lessee.
Ijarah Muntahia Bittamleek ends up with the transfer
of ownership of leased assets to the lessee.
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Ijarah and Ijarah Muntahia Bittamleek
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Ijarah and Ijarah Muntahia Bittamleek
GENERAL MECHANICS
. .
VENDOR ISLAMIC BANK Agreement CUSTOMER
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Ijarah and Ijarah Muntahia Bittamleek
GENERAL MECHANICS
. .
VENDOR ISLAMIC BANK Agreement CUSTOMER
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Difference Between Murabaha and
Ijarah
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Difference Between Murabaha and
Ijarah
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Difference Between Murabaha and
Ijarah
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Difference Between Ijarah and
Conventional lease
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Difference Between Ijarah and
Conventional lease
Undertaking to Ijarah
Agency Agreement
Ijarah Agreement
Rental Schedule
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Steps Of Banking Murabaha
Undertaking to Ijarah
Agency Agreement
Purchase
Payment of Purchase Price
Lease Agreement
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Expenses Related To Ownership
Issue Solution
In certain transaction of All expenses other than
Ijarah, all expenses related expense related to normal
to the ownership is born by wear and tear of the Ijarah
the customer. asset should be born by the
bank and may be included
into the list price of Ijarah
assets.
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Recovery of Rental
Issue Solution
The banks start recovering The banks should recover
the rental as soon as he rentals only after the delivery
disburses the amount to the of vehicle. It is an unanimous
supplier and before actually opinion of all the Sharaih
receiving the Ijarah asset by Scholars that it is not allowed
the customer. to recover rentals before
delivery.
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Recovery of Rental
Issue Solution
Repayment schedule not As per Shariah rules and SBP
signed by the customer instructions the amount of
rental must be agreed in
advance by both parties in an
unambiguous manner either
for the full term of the lease
or for a specific period in
absolute terms and rental
schedule shall be signed by
both parties.
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Recovery of Rental
Issue Solution
Delivery letter of the supplier for handing In Ijarah rental can be charged only after
over vehicle to the customer was not delivery of the assets to client. Therefore
found it is very important to know the delivery
date of the assets in Ijarah. Appendix D of
the approved documents is specifically
designed which contain date of delivery
of Ijarah assets to the client which needs
to be supported by documentary
evidences and should be linked with
rental schedule as it cannot be recovered
from the client before delivery date.
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Increase in Price of Ijarah Asset
Issue Solution
When the price increases In all such cases, bank
before Ijarah Agreement, should give the
customer pays the short proportionate owner in
fall without getting joint the Ijarah asset.
ownership
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Sale and Lease Back
Issue Solution
The sale and lease back The bank should execute
transaction without the proper sale agreement
signing proper sale with the customer before
agreement with the entering into lease
customer before the agreement. Otherwise the
execution of Ijarah transaction becomes
agreement. questionable in the eyes
of Shariah.
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Sale and Lease Back
Issue Solution
The bank executes the The Islamic bank should
sale agreement with the make a payment to the
customer and makes party with whom it
payment to other executes sale agreement.
conventional bank which
makes Islamic banks
doubtful in the eyes of
public.
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PAYMENT OF TAKAFUL COST
Issue Solution
In cases of combined Takaful cost should be
ownership model, borne by the partners in
customer only pay the proportionate to their
cost of Takaful. interest in the asset and
not be solely borne by the
customer.
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TAKAFUL
Issue Solution
In Ijarah cases, risks of As an Islamic financial
the leased assed should institution, the bank
be covered under Takaful should obtain Takaful for
arrangement rather than its leased assets under
under conventional Ijarah.
insurance polices.
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Questions?
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