A Ijara Home Finance

8/13/2019 A Ijara Home Finance

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Islamic Home Finance ProcessFlow



IJARAH WA IQTINA'AIJARAH WA IQTINA'A

ISLAMIC HOME FINANCE



Ijarah is a lease contract where the financial Institution purchase an asset / a property on thepromise of the customer to lease it from Financial Institutions and pays lease rental forspecific duration of time to derive specific benefits (usufruct) from the use of theasset/property.

• Asset / Property ownership remains with the Financial Institution (Lessor)

• Lessor is liable for the eneral maintenance of the asset / property! but the

responsibility is deleated to the Lessee.

• Lessee is oblied to maintain the asset / property in ood condition

• Lessor is responsible in case of loss of the leased asset/property

(unless due to negligence of the lessee).

• In case of total loss! the lease contract is terminated

• "uarantees! mortaes! liens on receivables are permitted.

What is Ijarah?

Some major features of an Ijarah transaction:

IJARAH



Ijarah Home Finance is an asset bac#ed financin contract where

$A%&A'% buys an asset/property identified by the customer! as

per his reuest/promise and then lease it to the customer at an

areed lease rental for a specific duration of time to derive specific

benefits (usufruct).

IJARAH WA IQTINA’A IJARAH HOME FINANCE!PRODUCT DEFINITION & FEATURES



Item Mortgage Loans Ijarah

ost competitive $esidential apartments * villas Land to be developed by selected developers +ith or without salary transfer commitments $epayment Period up to ,- years ortae amount up to 01ompetitive * attractive rates

2ransparent fee structure 3ero 4arly 5ettlement chares

The product features of mortgage loans will be applicable for Ijarah and

Forward Lease whilst compl!ing with Shari"ah #rinciples$

IJARAH WA IQTINA’A IJARAH HOME FINANCE!PRODUCT DEFINITION & FEATURES



(,) Purchased based on promise

(6) Promise to lease

if purchased

Payment to the

developer

(7) I8arah wa itina9a 1ontract

% the ownership of the leased asset ma! be transferred from lessor to lessee:

: at the end of the lease period as a ift or for a to#en consideration (preferable as a "ift)

: within an areed time frame before e;piry of the lease period

&ustomer

'(u!er)

*e+eloper

'Seller)

Aree terms on the property

(<) Lease rental payments %

IJARAH WA IQTINA’A IJARAH HOME FINANCE!DOCUMENTATION AND PROCESS FLOW

RAKBANK



1ustomer shall reuest $A%&A'% to purchase an asset / a property withan underta#in / promise from the customer to lease the same from$A%&A'%.

$A%&A'% purchases the asset from the =endor/>eveloper.

$A%&A'% then leases the asset to the customer as per his/her promise.

Periodical rentals are collected by $A%&A'%. 2he rentals need to besufficient enouh to cover the oriinal cost of the asset/property plus the

profit (in the form of lease rentals) reuired by $A%&A'%.




&ooperation

,greement

'(an- .

*e+eloper)

&ooperation,greement

'(an- .

*e+eloper)

#urchase

,greement

'(an- .

&ustomer)

#urchase

,greement

'(an- .

&ustomer)

#romise to

Lease

'&ustomer)

#romise to

Lease

'&ustomer)

#urchase

/nderta-ing

#urchase

/nderta-ing

Tripartite

,greement

'&ustomer

(an- .

*e+eloper

Tripartite,greement

'&ustomer

(an- .

*e+eloper

1

2

3

4

5

6

7

8

Standard Sale

. #urchase

,greement

'(an- .

*e+eloper)

Standard Sale

. #urchase

,greement

'(an- .

*e+eloper)

Lease

,greement

Lease

,greement

Ser+ice

,genc!

,greement

Ser+ice

,genc!

,greement

Sale

/nderta-ing

9




&ooperation

,greement

'(an- .

*e+eloper)

&ooperation

,greement'(an- .

*e+eloper)

&etween whom? $A%&A'% and >eveloper

+hy this Areement (Purpose/$eason)?

2o establish relationship with the >eveloper to finance his property to potential

customers by $A%&A'%! similar to a @.

1

#romise toLease

'&ustomer)

#romise to

Lease

'&ustomer)

&etween whom? $A%&A'% and 1ustomer


2o et customer9s promise that he/she will lease from $A%&A'%! once the

identified property is purchased from the >eveloper.

2

Standard Sale

. #urchase

,greement

'(an- .

*e+eloper)

Standard Sale

. #urchase

,greement

'(an- .

*e+eloper)

&etween whom? $A%&A'% and >eveloper


2o purchase property from the >eveloper by $A%&A'%! who in turn leases to

potential customers financed by $A%&A'%.

3




&etween whom? 1ustomer! $A%&A'% and >eveloper

+hy this Areement (Purpose/$eason)?A supplemental sale/purchase areement (5PA) between >eveloper * 1ustomer!

where the customer is released and dischared from the 5PA and $A%&A'%

become a party to the 5PA in place of the customer upon the terms setout in this

2ripartite Areement.

Tripartite

,greement

'&ustomer

(an- .

*e+eloper

Tripartite

,greement

'&ustomer

(an- .

*e+eloper

4

Lease

,greement

'L,)

Lease

,greement

'L,)



$A%&A'% as the Lessor wishes to lease to the 1ustomer the property and the

Lessee wishes to ta#e the property on lease.

5

Ser+ice

,genc!

,greement

Ser+ice

,genc!

,greement

&etween whom? $A%&A'% and the 5ervice Provider

(enerally the lessee acts in this capacity under a separate areement)


2his areement sets out the obliations of the service provider in relation to the

property. In most cases the lessee will be the service provider too who will fulfill

the terms and condition under this areement.

6




&etween whom? $A%&A'% and the 1ustomer+hy this Areement (Purpose/$eason)?

Pursuant to the lease areement between $A%&A'% and the 1ustomer! the

purchase underta#in by the customer in favour of $A%&A'% is spelled out in

this areement

#urchase

/nderta-ing

'#/)

#urchase

/nderta-ing

'#/)

8

9



2his areement is e;ecuted in case the customer wants to purchase the property

prior to completion of the lease.

#urchase

,greement

'(an- .

&ustomer)

#urchase

,greement

'(an- .

&ustomer)

&etween whom? $A%&A'% and the 1ustomer

+hy this Areement (Purpose/$eason)?Pursuant to the lease areement between $A%&A'% and the 1ustomer! were

$A%&A'% is underta#in to sell the property at any time customer wants to

terminate the I8arah 1ontract.

Sale

/nderta-ing

'S/)

7




0ame of the *ocuments

Signatories

(an- &ustomer *e+eloper1Seller

I8arah Application ; ;

1ustomer Promise to $ent ; ;

I8arah Bome Finance 1ontract ;

5ervice Aency Areement ;

2ripartite Areement C ; ;

5PA ;

Purchase nderta#in C C

5ale nderta#in C C


T2#3 4F FI0,0&3 #54*/&T: I6,5,H H4M3 FI0,0&3

&40*ITI40: 04 *4W0 #,2M30T



0ame of the *ocumentsSignatories

(an- &ustomer *e+eloper1Seller

I8arah Application ; C

1ustomer Promise to $ent ; C

I8arah Bome Finance 1ontract ;

5ervice Aency Areement ;

2ripartite Areement

5PA ;

Purchase nderta#in ; C

5ale nderta#in C C


T2#3 4F FI0,0&3 #54*/&T: I6,5,H H4M3 FI0,0&3

&40*ITI40: WITH *4W0 #,2M30T

Documents

A Ijara Home Finance