Structure of an Ijarah transaction
Structure of an Ijarah transaction

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Structure of an Ijarah transaction
  • Key features

Key features

  1. This is the equivalent of leasing in an Islamic finance structure and is a contract under which the owner (lessor) purchases an asset and then transfers the right to use and derive profit from that asset, known as the usufruct, to another person (the lessee) for an agreed period of time and an agreed consideration

  2. The Islamic Financial Institution (IFI)/lessor will purchase an asset at the request of the Customer/lessee and must retain title to the leased property for the duration of the lease. This asset must be of a non-consumable nature and not one prohibited under Shari'ah and it is important that the

Popular documents