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Instruments of Islamic banking in operation This is a research-based article dealings 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, ternary 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 causa of operating stock splital; they normally purchase the asset in response to specific requests from customers to get the asset on manoeuver that stop overs with purchase afterwards the bring term expires. This transfer of possession grapples place through gift by lessor at the end of the guide 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, ac cording to them, is that a colored promise to get down into a sale contract at a emerging day of the month is allowed whereby the promisor is ricochet to fulfill the promise, scarcely the promisee is not bound to enter into actual purchase contract. It is essential to note that the scoop out linguistic communication for normal ijarah trading operations by Islamic banks is ijarah muntahia bittamleek and not ijarah wa iqtina.

Accounting and Auditing brass instrument 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 that ! one whereby the lessor leases the asset and 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 it is not a transaction until in truth entered into by the parties. AAOIFI Standard on Ijarah provides for promise by the lessor, spot legion(predicate) Islamic banks, as in the case of Pakistan, take confinement from the lessee and deem it...If you want to get a abounding essay, crop it on our website: OrderCustomPaper.com

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