Certainly, only a financial system with such noble values can keep at bay any economic adversity in a society, and is bound to create equal opportunities towards...


Sukuk Issuance

Understanding the project

Structuring the project
Pre-marketing feedback

Transaction legal documents and Fatwa


Salam  Sale commodity 

Like istisna, Salam is another sale structure where certain commodity is transacted before coming into existence. In Salam, seller undertakes to supply certain commodity in future...


Ljara - Leasing

  • Ljara is leasing of an asset or sale of ‘usufruct or right to use’ the asset. leased asset must have certain sharia-compliant usage else it cannot be made subject matter of a lease contract.
  • It is necessary that either the lesser owns the asset and holds valid title and possession to it before starting the lease, or at least holds usufruct to the asset for sub-leasing purpose
  • Lease can be operating or financial : In operating lease, the asset is returned to the lessor upon completion of the lease term.
  • Under financial lease, asset is sold to lessee by lessor upon completion of lease term. This is called “ljara Muntahiyya Bittamleek “ ( IMBt ).
  • For ljara, the leased asset must have certain value and remains intact at the end of agreed lease term, or upon early termination of lease.
  • Consumables such as, fuel, grain, electricity, etc. are not fit for leasing since they are consumed. Similarly, gold, silver, metal, stones, etc . also cannot be leased since they have no usage as such.
  • However, real-estate, aircrafts, vessels, vehicles,etc. are lease-able, having certain usage and remain intact till the end of lease term.
  • At client’s request and promise to lease, Islamic bank purchases asset or usufruct of an asset and leases it to client for a specified duration and agreed rentals, on financial lease ( or IMBT ) basis.
  • Lease commences upon delivery of the asset by the Islamic bank to the client, I.e. upon the client getting possession to the asset leased by it.
  • Lease rent is fixed by the Islamic bank keeping in view market competitiveness.
  • As such, lease term of , say 10 years, may be divided into smaller sub-periods of say 1/3/6 month, to re-fix lease rent as per market trends.
  • However, in order to achieve the same, parties must agree to an unambiguous formulae which will determine the rent for all sub-periods.
  • Lessee is not permitted to use leased asset other than what is stated in lease contract. Furthermore, lessee cannot sub-lease the asset, if not permitted to do so in the lease contract.
  • As per sharia, lease will terminate immediately upon the total loss of the asset or its damage beyond the economic repair.
  • Leased asset is insured to protect lessor’s interest at lessor’s cost.
  • If total loss is due to lessee’s negligence, although lease will terminate forthwith, the lessee will responsible to compensate lessor for any shortfall in the insurance proceeds received by lessor.
  • In case the total loss to the leased asset is not caused by lessee, lessor will bear the insurance shortfall itself.
  • In either case of total loss of the leased asset ( i.e. with or without lessee’s negligence ) lessee will pay rentals only up to the date of occurrence of total loss and nothing more than that.
  • At successful end of the lease term. the asset is sold by the lessor to lessee at a nominal price through a separate sale contract.
  • Separaye sale contract is to achieve the transfer of title from lessor to lessee since the lessee has satisfactorily completed the lease term and is now entitled to own the asset.
  • This structure is commonly use by the Islamic banks for home financing activities.