8. Ijara.ppt - Al Ijarah Essentials of Islamic Banking and...

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Al Ijarah Al Ijarah Essentials of Islamic Banking and Finance Talha Saleem Kapadia [email protected]
Contents Contents Definition of Ijarah; Explanation; Features of Ijarah; Difference with conventional lease; Practical application; Q & A
Definition of Ijarah Definition of Ijarah Ijarah is an Arabic word whose origin is 'Ujrah' (compensation/fee/fare); Ijarah means giving something to other for use against a fee or rent or fare; In conventional finance concept of Leasing is similar to Ijarah; Conventional lease is defined as 'a right to use or occupy a property given by owner of the property (lessor) to another person (lessee or tenant) for a period of time, whereby the lessee obtains exclusive possession of the property in return for payment of fixed or determinable (floating) consideration (fee or rent) to lessor'; So it is act of giving a physical thing to other person for use against a return (rent or fee); Leasing does not include employment which means “activity or service performed by a person (employee) for another person (employer) for compensation (fee) or as an occupation (salary);
Definition of Ijarah Definition of Ijarah This concept of Ijarah is broader than of the leasing; Its literal meaning is to give something on rent; In Islamic Fiqh the term of Ijarah has two meanings: To employ the services of a person on wages or fee (Ijarah al-Shakhsiyyah – services Ijarah); and To give a right to use a property or an asset to a person for a period of time against payment of a rent/charges/fee; In Islamic finance second type of Ijarah is discussed;
Expalnation of Ijarah Expalnation of Ijarah Ijara in simple terms, implies leasing or hiring of a physical asset; It is a popular product in which the Islamic bank assumes the role of an aajir or moojir (lessor) and allows its client to use a particular asset that it owns; The client or mustajir (lessee) receives through Ijarah the benefits associated with ownership of the asset against

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