Ijarah (Islamic Leasing)
A Shariah-compliant leasing agreement where the bank purchases an asset and leases its usufruct to the client.
Detailed Definition
Ijarah corresponds to a lease agreement where the lessor retains ownership and structural risk of an asset, while the lessee enjoys the right of use in exchange for fixed periodic rental payments. It frequently culminates in an Ijarah wa Iqtina (lease ending with ownership transfer).
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Related in Islamic Finance
Sukuk (Islamic Bonds)
Shariah-compliant debt instruments representing fractional ownership in tangible assets.
Riba (Usury/Interest)
Unjustified, exploitative gains or predetermined interest charged on loans, prohibited in Shariah.
Murabaha (Cost-Plus Financing)
An Islamic financing structure where the bank buys an asset and sells it to the client at cost plus a disclosed profit margin.