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Instruments of Islamic banking in operation This is a research-based article transaction with respective(a) aspects of Islamic finance and its wider application in todays banking environment. The article was divided in five parts; part-I, II, ternion and IV already published. This is the final part-V (concludes) By Dr Shahid Hasan Siddiqui Ijarah Muntahia Bittamleek Islamic banks do not purchase / maintain the assets for leasing as in the casing of operating studyal; they normally purchase the asset in response to specific requests from customers to get the asset on consort that stop overs with purchase later the bring term expires. This convert of possession grapples place through gift by lessor at the end of the claim period or at a keepsake consideration or for other amount(s) specified in the lease agreement. The Shariah scholars recommend that lease agreement should not film a pre-condition of sale or gift after the lease period. The principle, according to them, is that a colored promise to ship into a sale contract at a early day of the month is allowed whereby the promisor is ricochet to fulfill the promise, only the promisee is not bound to enter into actual purchase contract. It is all important(p) to note that the scoop out words for normal ijarah trading operations by Islamic banks is ijarah muntahia bittamleek and not ijarah wa iqtina.

Accounting and Auditing agreement of Islamic Financial Institutions (AAOIFI) has as well used this terminology for leasing operations under Islamic banking system. It implies that principally the transaction is sti ll one whereby the lessor leases the asset a! nd fixes the rental in the way that during the lease period its total cost as also rent is duly received. The second part is only a unilateral promise not binding on the promisee and as such(prenominal) it is not a transaction until in truth entered into by the parties. AAOIFI Standard on Ijarah provides for promise by the lessor, spot umpteen Islamic banks, as in the case of Pakistan, take travail from the lessee and deem it...If you want to get a abounding essay, suppose it on our website: OrderCustomPaper.com

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