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l identify the vehicle that wishes to lease and eventually take the ownership. In some jurisdictions, a de

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Musharakah Mutanaqisah refers to diminishing ‘musyarakah’, which is co-ownership agreement between the Islamic bank and the financing customer. One of the partner promises to purchase the equity share of the other partner gradually until the title of the equity is completely transferred to him. The transactions start with the formation of partnership after which buying and selling of the equity takes place between two partners.

MODUS OPERANDI OF HOME FINANCING: MUSHARAKAH MUTANAQISAH

My position as private workers, I will choose to use Musaharakah Mutanaqisah Home Financing. Modus Operandi is as follow:

1.      I will identify the property, sign the agreement, pays deposit and apply for the financing.

2.       When the application is approved, Banks will enters into a Musyarakah Arrangement.

3.      Then, I will rent the Bank’s share in the house.

4.      I will pay an amount in addition to the rental to buy the Bank’s units in the property.

5.      Lastly, the partnership will terminated with the customer owning 100% of the house and the title will be transferred to him or her.

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VEHICLE FINANCING : AITAB (AL-IJARAH THUMMA AL-BAY)

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VEHICLE FINANCING : AITAB (AL-IJARAH THUMMA AL-BAY)

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Ijarah means lease, rent or wage. Generally, Ijarah concept means selling the benefit of use or service for a fixed price or wage. Under this concept, the bank makes available to the customer the use of service of assets/ equipment such as plant, office automation, motor vehicle for a fixed period and price.

MODUS OPERANDI OF VEHICLE FINANCING : AITAB (AL-IJARAH THUMMA AL-BAY)

My position as private workers, I will choose to use Al-Ijarah Thumma Al-Bay VehicleFinancing. Modus Operandi is as follow:

1.      I will identify the vehicle that wishes to lease and eventually take the ownership. In some jurisdictions, a deposit is paid by me to the dealer. If this is the case, the deposit is deemed as an advance made by me on behalf of the bank.

2.      Then, the bank purchases the asset from the owner on cash basis.

3.       Upon having the ownership of the vehicle, the bank enters into an AITAB(Islamic hire purchase) agreement with me in which leases the vehicle from the bank against specified rentals over the lease period. At the same time, I will undertake to purchases the vehicle from the bank at the end of the leasing/financing tenure.

4.      I will repay the financing via monthly lease payment and at the end of the leasing period, a sale contract is executed at a nominal price by transferring the title of ownership of the vehicle to me.

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Tawarruq or commodity murabahah can be defined as an arrangement that involves the purchase of an asset based on musawamah (supplier does not disclose its cost or markup) or murabahah (supplier sells at markup and disclose it) and the subsequent sale of the same asset to a third party in order to raise cash. By doing so, customer would receive cash that will be used for his/her personal requirement.

MODUS OPERANDI OF PERSONAL FINANCING: TAWARRUQ

My position as private workers, I will choose to use Tawarruq Personal Financing. Modus Operandi is as follow:

1.      Both  and bank will get into an agreement where customer promise to buy specified commodity or asset from bank. Bank will be appoint as agent to sell back the asset.

2.      Bank will buy specified asset from broker A on a spot basis.

3.      Bank will sell the same commodity bought from Broker A to customer on deferred basis at cost plus profit.

4.      Bank will act as agent to sell the commodity on behalf of the customer to Broker B on spot basis.

5.      The proceeds from the selling will be given to customer in lump sum.

6.      I will pay the bank the purchase price which is cost plus profit on a deferred installment basis.