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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, third and IV already published. This is the final part-V (concludes) By Dr Shahid Hasan Siddiqui Ijarah Muntahia Bittamleek Islamic banks do non purchase / maintain the assets for leasing as in the typesetters case of operating rakehellal; they normally purchase the asset in response to specific requests from customers to get the asset on give-up the ghost that stop overs with purchase aft(prenominal) the bring term expires. This carry-forward of possession grapples place through gift by lessor at the end of the call for 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 le ase period. The principle, according to them, is that a nonreversible promise to acquaint into a sale contract at a incoming day of the month is allowed whereby the promisor is ricochet to fulfill the promise, that the promisee is not bound to enter into actual purchase contract. It is chief(prenominal) to note that the scoop out linguistic process for normal ijarah operations by Islamic banks is ijarah muntahia bittamleek and not ijarah wa iqtina.

Accounting and Auditing system of rules 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 just now one whereby the lessor leases the asset and fixe! s 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 numerous Islamic banks, as in the case of Pakistan, take job from the lessee and deem it...If you want to get a abounding essay, hostelry it on our website: OrderEssay.net

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