Ijarah Muntahia Bittamleek. 1 definition. Ijarah Muntahia Bittamleek. as defined in Bahrain Monetary Agency Rulebook, Islamic Banks: Glossary of Defined. Lease (‘ijarah) contracts that end up with transfer of ownership of leased assets to the lessee. It can take one of the following forms: (i) A contract tha. Shari’ah Standard No. (9): Ijarah and Ijarah Muntahia Bittamleek Statement of the Standard 1. Scope of the Standard This standard covers operating leases.

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However, the heirs of the lessee may terminate the Ijarah contract if they can prove that the contract has become, as a result muntzhia the death of their legator, too onerous for their resources and in excess of their needs.

Islamic Finance | Types of Ijarah Muntahia Bittamleek

It is permissible to agree with the customer, upon the execution of the contract of lease, that this kuntahia shall be treated as an advance payment of the instalments of the lease rental. Monetary and Banking Developments – September It may also be for a fixed or variable amount, according to whatever designated method the two parties agree upon.

This bitramleek must be long enough so that the leased property or its value could have changed.

It is then permissible that the rentals for subsequent periods be determined according to a certain benchmark. If it is not possible to provide a substitute asset, the contract will be terminated.

Sign in to continue reading Ijarah and Ijarah Muntahia Bittamleek also apply to the case of early ownership of the asset where a sale contract is concluded during the Ijarah. Although this type of agency for the purchase of the assets is permissible, it is always preferred that the agent is someone other than the customer prospective lessee as far as possible. The lease then continues with the rental based on the prevailing market value. The lessor may take this into account implicitly when the lease rental is to be fixed.

Ijarah and Ijarah Muntahia Bittamleek between the date specified in the contract and the date of actual delivery, and the rental should be reduced accordingly, unless it is agreed that the iharah be extended by an equivalent period after its original expiry date. However, it is preferable for the Institution bbittamleek forgo any amount in excess of the actual damage it has suffered.



An Ijarah may be renewed for another term, and such renewal may be made before the expiry of the original term or automatically by adding a provision in the new contract for such renewal when the new term starts, unless either party serves a notice on the other of its desire not to renew the contract. The lessee will not be held liable for any damage or destruction of the leased asset unless such damage or destruction is a result of misconduct or negligence on the part of the lessee.

This benchmark should be subject to a ceiling, on both maximum iharah minimum levels. By IM Research 9 months ago.

It is not a requirement of this lease that the rental should be paid in advance as long as the lease is not executed according to the contract of Salam or Salaf. However, if the asset is made available only after a period longer than what customary practices deem proper, then no payment shall be obligatory.

“Ijarah and Ijarah muntahia bittamleek” carried out by Islamic Banks: definition & accounting

Weekly Selected Indicators – 26 October. If the purchaser does not know about the Ijarah contract, he may terminate the sale contract, but if he knows about it and consents to it, he takes the place of the previous owner in his entitlement to the rental for the remaining period. In such a case, it may not be stipulated that the rest of the instalments should be paid. The rental may be paid entirely in advance or in instalments during a period equivalent, or more or less, to the duration of the Ijarah.

The lessor in this case is not entitled to rent for the period during which the lessee was not able to benefit from the asset unless the lessor makes it up by agreement with the lessee with a like benefit after the expiry of the period specified in the contract. In this case, an agreement is reached to make the described asset available during the duration of the contract, giving the lessor the opportunity to acquire or to produce it.

None of these rules should be breached under the pretext that the leased asset was bought by the lessor on the basis of a promise by the lessee that he would acquire it or that ownership of it would devolve upon him, or that he would pay rentals in excess of those payable in respect of a similar property which are similar in amount to the instalments of an instalment sale, or that local laws and conventional banking practices consider such a transaction as an instalment sale with a deferred transfer of the ownership.


Protection of Capital and Investments ijara Adoption of the Standard. However, it is permissible to have a master agreement drawn up coveringa number of Ijarah transactions between the Institution and the customer, setting out the general terms and conditions of agreement between the two parties.

It is also permissible to make the rent payable in instalments, in which case the lessor may stipulate that the lessee should immediately pay the remaining instalments if he, after receiving a specified period of due notice, delays, without a valid reason, payment of one instalment or more, provided that the asset shall be made available for the lessee to use for the remaining period of time.

That is, the difference between the prevailing rate of rental and the rental specified in the ijsrah must be refunded to the lessee if the latter rental is higher than the bittamlleek. This can only be done before entering into a sub-lease. However, kuntahia is bttamleek a customer to request an Institution to acquire mmuntahia asset or to acquire the usufruct of an existing asset which the customer wishes to take on lease.

The lessor may take out permissible insurance on it whenever possible, and such insurance expenses must be borne by the lessor. For example, a house or a chattel may not be leased for bittakleek purpose of an impermissible act by the lessee, such as leasing premises to be used as headquarters by an Institution dealing in interest or to a shopkeeper for selling or storing prohibited goods, or leasing a vehicle to transport prohibited merchandise.

Login Sign Up Toggle navigation. In this case the lessee may benefit from the leased share in the same way in which the lessor used to benefit from it, i. Ijarah and Ijarah Muntahia Bittamleek an asset that does not conform to the description, then he is entitled to reject it and demand an asset that conforms to the description.