This is a lease contract wherein the Bank leases property to the customer in return for a rental payment over a specified financing period. The Bank promises to transfer the title of the property to the customer at the end of the financing period, provided all payments have been made in accordance with the Sharia documention.
Ijarah is an effective and practical financing tool that allows businesses to acquire equipment and machinery through leasing, instead of outright purchase, thus reducing the heavy burden of capital expenditure. The leasing period normally ranges from 3-7 years and the customer has the right to purchase the leased asset at the end of the Ijara period.
