The underlying concept(s) adopted for this product are either;
A diminishing partnership whereby two parties jointly purchase a property with respective capital contributions, and the share of one party diminishes and is transferred to the other party by purchasing through rental paid until the property is fully owned by one party.
The Bank and Customer enters a Partnership (“Musharakah”) contract to jointly purchase and co-own a completed property. Both the customer and the Bank will contribute to the shares of the property. The Bank will lease its part of the property to the Customer under a lease (“Ijarah”) agreement. The Customer will pay the rental whilst also buying the shares owned by the Bank gradually until all the Bank’s shares are purchased by the customer over the period of financing. The property now is solely owned by the Customer.
If the subject matter of the partnership is an under-construction property, the Bank will lease its part of the property to the Customer under a forward lease (“Ijarah Mausufah Fi Zhimmah”) arrangement whereby Customer will pay advance rental (inclusive buying the Bank’s shares). Once the property is completed, the forward lease agreement will be changed to a normal lease agreement and the process will be the same as the completed property above.
Bai Bithaman Ajil
Sale contract based on deferred payment at certain price. The Bank sells goods owned to the customer on a deferred payment basis with disclosed price and profit amount (“Murabahah sale”). The Bank will offer to buy back the goods from the customer at spot basis.