Car Ijara Assignment Islamic Banking and Finance original.edited.docx

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1 Running Head: CAR IJARA ASSIGNMENT ISLAMIC BANKING AND FINANCE Car Ijara Assignment Islamic Banking and Finance Name Course Date
2 Running Head: CAR IJARA ASSIGNMENT ISLAMIC BANKING AND FINANCE Introduction The world of banking system allows the application of both conventional and Islamic banking systems, with each highlighting different principles, laws, and policies that run their operations. Islamic finance ultimately advocates implementing Sharia law to both the businesses and various individuals, preferring to invest their capital in Islamic banking. One of the permissible joint investments under Islamic finance is the Ijara financing that benefits the bank and the individual entering the Ijara contract. Ijara, which is also known as leasing, defines that an individual entering into the contract enjoys usufruct rights of a particular specified asset or property from the owner, which is, in this case, is the bank over a specified period of the agreed time and the agreed rental payments. The article epitome focuses on the analysis of car Ijara by answering related questions circulating the concept. Questions and Answers 1. Outline the key differences between conventional leasing and Islamic leasing. Conventional lease refers to a financial contract that governs both the lessor (banks) and the lessee (individual) for the possession and charter of an exciting asset or property, with the lessor assuming the full ownership of the property. In contrast, the lessee enjoys the full utilization of the asset for a specified period with a series of formulated payments made to the lessor. Through the definition, a notable difference presents itself since, in Islamic leasing, the lessor, which is the financial institution, maintains the official right in possession of the asset as mentioned earlier for the outlined time limit, which is utterly different from the conventional leasing
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