The document discusses various Islamic financial instruments used in Malaysia. It describes instruments like Mudharabah, Musharakah, Murabahah, Ijarah, and Wakalah. It explains how these instruments work, including the rights and responsibilities of parties in each contract. Shariah committees provide oversight to ensure Islamic banks operate according to Shariah principles.
The document defines al-ijarah (leasing) and discusses its pillars, types, conditions and modern applications. It states that al-ijarah refers to the lease of an asset's usufruct or services for a fee. The key pillars are the owner (lessor), user (lessee), asset and fee. Types include leasing tangible assets or labor. Conditions include specifying the asset, payment and contract terms. Modern applications discussed are simple leasing, al-ijarah thumma al-bay' (lease-to-own), musharakah and sukuk structures.
1) Murabahah is a sale contract where the seller discloses the cost price and profit margin to the buyer. It involves the purchase and resale of assets where the seller earns a defined profit margin.
2) The key pillars of a murabahah contract include the seller, buyer, asset being traded, price, and offer/acceptance. It must also avoid elements of riba such as uncertainty around prices.
3) Modern applications of murabahah include its use in Islamic banking for financing, treasury products, sukuk issuances, and international trade. Structures like tri-party murabahah and murabahah to the purchase order are commonly used.
Conventional & Islamic Negotiable Instrument ASMAH CHE WAN
The document discusses the differences between conventional and Islamic negotiable instruments. For conventional instruments, negotiable instruments are governed by the Bills of Exchange Act 1949 and Cheques Act 1957, while Islamic instruments are governed by the Islamic Financial Services Act 2013. Some key types of conventional instruments include bills of exchange, cheques, promissory notes, and bankers' drafts. Islamic negotiable instruments include the Islamic Negotiable Instrument of Deposit (INID), which is based on the al-mudharabah concept, and the Negotiable Islamic Debt Certificate (NIDC).
This document discusses the concept of al-Tawarruq, an Islamic financing structure. It begins with an overview of Bank Islam Malaysia and its Shariah governance bodies. It then defines al-Tawarruq as the buying of a commodity on deferred payment and selling it for cash to a third party. The document outlines arguments for both prohibiting and permitting al-Tawarruq, and discusses issues around its operationalization. It concludes with trends showing growing use of al-Tawarruq products in Malaysian Islamic banks.
Bay' al-Inah and Tawarruq are Islamic financing techniques that involve two sale contracts to provide liquidity to customers. Both techniques involve the customer purchasing an asset on deferred payment terms, then immediately reselling the asset for cash. There are debates around the permissibility of each technique, with conditions applied. Proponents argue they are permissible when following the correct procedures, while opponents argue they enable backdoor interest. Regulators allow them with restrictions to prevent interest.
The document discusses Sukuk, an Islamic financial certificate that is an alternative to conventional bonds. Sukuk are asset-backed and represent partial ownership of an asset, rather than debt. They can be structured using various Islamic financing contracts like murabahah, ijara, musharakah, and mudharabah. Malaysia has been a pioneer in developing the Sukuk market, with the first issuance in 1990 and the establishment of regulatory standards. It remains one of the largest Sukuk issuing countries globally.
This clause makes the Ijarah contract invalid because selling of the asset cannot be contingent upon fulfilling the terms of the Ijarah contract. Under Islamic finance principles, the lease and sale contracts must be separate, with the sale not being an automatic outcome of fulfilling the lease terms.
The document discusses various Islamic financial instruments used in Malaysia. It describes instruments like Mudharabah, Musharakah, Murabahah, Ijarah, and Wakalah. It explains how these instruments work, including the rights and responsibilities of parties in each contract. Shariah committees provide oversight to ensure Islamic banks operate according to Shariah principles.
The document defines al-ijarah (leasing) and discusses its pillars, types, conditions and modern applications. It states that al-ijarah refers to the lease of an asset's usufruct or services for a fee. The key pillars are the owner (lessor), user (lessee), asset and fee. Types include leasing tangible assets or labor. Conditions include specifying the asset, payment and contract terms. Modern applications discussed are simple leasing, al-ijarah thumma al-bay' (lease-to-own), musharakah and sukuk structures.
1) Murabahah is a sale contract where the seller discloses the cost price and profit margin to the buyer. It involves the purchase and resale of assets where the seller earns a defined profit margin.
2) The key pillars of a murabahah contract include the seller, buyer, asset being traded, price, and offer/acceptance. It must also avoid elements of riba such as uncertainty around prices.
3) Modern applications of murabahah include its use in Islamic banking for financing, treasury products, sukuk issuances, and international trade. Structures like tri-party murabahah and murabahah to the purchase order are commonly used.
Conventional & Islamic Negotiable Instrument ASMAH CHE WAN
The document discusses the differences between conventional and Islamic negotiable instruments. For conventional instruments, negotiable instruments are governed by the Bills of Exchange Act 1949 and Cheques Act 1957, while Islamic instruments are governed by the Islamic Financial Services Act 2013. Some key types of conventional instruments include bills of exchange, cheques, promissory notes, and bankers' drafts. Islamic negotiable instruments include the Islamic Negotiable Instrument of Deposit (INID), which is based on the al-mudharabah concept, and the Negotiable Islamic Debt Certificate (NIDC).
This document discusses the concept of al-Tawarruq, an Islamic financing structure. It begins with an overview of Bank Islam Malaysia and its Shariah governance bodies. It then defines al-Tawarruq as the buying of a commodity on deferred payment and selling it for cash to a third party. The document outlines arguments for both prohibiting and permitting al-Tawarruq, and discusses issues around its operationalization. It concludes with trends showing growing use of al-Tawarruq products in Malaysian Islamic banks.
Bay' al-Inah and Tawarruq are Islamic financing techniques that involve two sale contracts to provide liquidity to customers. Both techniques involve the customer purchasing an asset on deferred payment terms, then immediately reselling the asset for cash. There are debates around the permissibility of each technique, with conditions applied. Proponents argue they are permissible when following the correct procedures, while opponents argue they enable backdoor interest. Regulators allow them with restrictions to prevent interest.
The document discusses Sukuk, an Islamic financial certificate that is an alternative to conventional bonds. Sukuk are asset-backed and represent partial ownership of an asset, rather than debt. They can be structured using various Islamic financing contracts like murabahah, ijara, musharakah, and mudharabah. Malaysia has been a pioneer in developing the Sukuk market, with the first issuance in 1990 and the establishment of regulatory standards. It remains one of the largest Sukuk issuing countries globally.
This clause makes the Ijarah contract invalid because selling of the asset cannot be contingent upon fulfilling the terms of the Ijarah contract. Under Islamic finance principles, the lease and sale contracts must be separate, with the sale not being an automatic outcome of fulfilling the lease terms.
Contract of Wadiah and its Application in Islamic BankingNabil Bello
This document discusses the concept of wadiah in Islamic banking. Wadiah refers to safekeeping of property in trust. There are two main types - wadiah yad al-amanah which is pure safekeeping with no liability for losses, and wadiah yad al-dhamanah which guarantees return of deposits. Wadiah is applied in savings accounts, where deposits are guaranteed but returns are at the bank's discretion, and current accounts, where deposits are used by the bank with no returns paid. While wadiah is widely used in modern Islamic banking, some argue this differs from the original concept of pure safekeeping of property in trust described in Islamic sources.
This document discusses the concept of Ijarah in Islamic finance. Ijarah refers to the leasing or renting of an asset where ownership remains with the lessor. The document outlines different types of Ijarah contracts and how they work, including operating leases where ownership remains with the bank, and financial leases where ownership may transfer to the lessee. It also discusses various terms and conditions that govern Ijarah contracts such as rental rates, security deposits, lease periods, and termination.
The document discusses the issue of Bai Bithaman Ajil (BBA) contracts as used in Islamic financing in Malaysia. It summarizes the conceptual model of BBA, which involves the deferred payment sale of an asset from a seller to a purchaser. The document then discusses 5 previous court cases related to BBA and the legal issues they raised. The cases analyzed whether the BBA structure qualified as a legitimate sale contract under Shariah or resembled interest-based financing. The document concludes by noting the Malaysian government strengthened regulations on Islamic finance to address legal uncertainties surrounding BBA raised by the court cases.
Bay al-dayn refers to the sale of debt in Islamic finance. It involves the sale and purchase of a quality debt, either to the debtor or a third party. There are differing views among Islamic scholars on whether debt can be sold to a third party. Proponents argue it can be allowed subject to certain conditions to avoid risks like gharar. Critics argue the sale of debt to non-debtors is prohibited due to issues like selling something one does not possess.
The document discusses the concept of Bai Bithaman Ajil (BBA), which is an Islamic financing technique that allows for the deferred payment of goods purchased. BBA involves the immediate delivery of an asset to the buyer while payment is postponed to a future date or paid through installments. The document examines the principles, evidence, objectives, mechanics, and pricing considerations of BBA transactions.
This document defines and discusses the concept of bay' al-tawarruq, an Islamic financing structure. It provides the definition, evidence from Islamic legal sources, key pillars and participants, types, conditions and a modern application of bay' al-tawarruq. Bay' al-tawarruq involves the purchase of a commodity on credit followed by the immediate resale of that commodity to a third party for a lower price in cash. The document outlines the different types and conditions that must be met for bay' al-tawarruq to be valid according to Islamic law.
Mudharabah is a partnership contract between two parties where one provides capital to the other to invest in a business venture. Any profits generated are shared between the parties according to a predetermined ratio, while losses are borne solely by the capital provider. The document defines mudharabah, provides evidence for it from the Quran and hadith, and outlines the key pillars, categories, conditions, differences from musharakah, and modern applications of mudharabah contracts.
This document discusses Islamic investment in equities markets. It begins by outlining the types of securities, including common stock and preferred stock. Common stock represents ownership in a company and provides rights to dividends and voting. Preferred stock has limited voting rights but priority claim to dividends. The document then examines the underlying Shariah contract of stocks, which is based on principles of Musharakah profit and loss sharing. While common stock is generally permissible, preferred stock faces restrictions. The document concludes by discussing various ways shareholders can be rewarded, such as cash dividends, bonus issues, and rights issues, all of which can be compliant with Shariah perspectives.
This document provides an overview of the key concepts and philosophy of Takaful, which is an Islamic insurance system based on mutual assistance. It discusses how risk management is viewed in Islam and the Quranic principles of preparing for hardship. Takaful operates based on participants contributing funds and jointly guaranteeing each other in case of need, as opposed to conventional insurance which is seen as risky. The document outlines the definitions and origins of Takaful, compares it to conventional insurance, and explains some of the investment principles and contract types used in Takaful like Mudharabah and Tabarru.
1) Mudarabah is a partnership agreement where one party provides capital while the other provides labor and management skills, with profits shared between the parties according to a predetermined ratio.
2) In mudarabah, the capital provider is called rabb-ul-maal and the manager is called the mudarib. The mudarib manages the business while the rabb-ul-maal does not interfere.
3) Mudarabah can be used by Islamic banks for investment purposes and financing projects, businesses, and private equity through profit-sharing with entrepreneurs. Deposits from customers to banks are treated as rabb-ul-maal funds to be invested by the bank as mudarib.
This document discusses Islamic financial planning and takaful (Islamic insurance). It begins by defining takaful and explaining how it differs from conventional insurance by being based on mutual assistance and contribution to a common fund. The document outlines the key concepts of tabarru' (donation) and mudharabah (profit-sharing) business models used by takaful operators. It then discusses how to determine the appropriate amount of takaful coverage needed based on a family's monthly expenses and existing financial resources. The document provides approaches like using a multiple of one's salary or assessing actual needs to estimate a maintenance fund size. It emphasizes the importance of choosing a takaful policy that matches one's specific needs and objectives
The document defines and discusses the concept of al-hiwalah, an Islamic contract that involves the transfer of debt from one party to another. It provides key details on al-hiwalah, including its definition, evidence and pillars supporting it in Islamic jurisprudence, categories, issues, and application. Examples are given to illustrate types of restrictions and conditions for a valid al-hiwalah contract.
The document defines and discusses the Islamic financing concept of al-ijarah. Some key points:
- Al-ijarah refers to a lease or rental contract in which one party allows another to use an asset for a fee. It is distinguished from a normal sale by having a specified time period.
- The pillars of al-ijarah include the owner (mu'ajjir), user (musta'jir), asset (ma'jur), benefit/usufruct (manfaah), fee (ujrah), and offer/acceptance (sighah).
- A major modern application is al-ijarah thumma al-bay', where a lease
Takaful is an Islamic insurance model based on mutual assistance and contribution. It avoids issues of conventional insurance like gharar (uncertainty), maisir (gambling), and riba (interest) by operating as a cooperative model where participants donate part of their contributions to a common fund to assist those who experience defined losses. The fund is managed by a company using mudarabah and wakala models to invest contributions and provide services while avoiding interest. Takaful can be used to insure various assets and risks like property, vehicles, goods, health and life.
1) Islamic banks obtain funds from deposits and use those funds to finance various approved investment activities like trade financing. More than 75% of funds come from deposits.
2) Financing must follow Shariah principles like prohibiting interest and uncertainty and balancing individual and societal needs.
3) The bank uses modes like murabahah, ijarah, mudharabah and musharakah with different structures for purchasing, leasing or jointly investing in assets and sharing profits and losses according to capital contributions.
This document provides information on various Islamic financing concepts, including Al-Ijarah, Al-Ijarah Thumma Al-Bai (AITAB), and their application in motor vehicle financing.
Al-Ijarah refers to a leasing or rental contract where the lessor provides the lessee use of an asset for a fixed rental payment. There are two types - Al-Ijarah 'Amal for hiring services or labor, and Al-Ijarah 'Ain for hiring assets. AITAB combines two separate contracts - an initial Ijarah contract followed by a sale contract (Bai') at the end of the lease period, allowing the lessee to purchase the asset
An Analysis of the Courts’ Decisions on Islamic Finance DisputesMahyuddin Khalid
The document summarizes several key court cases related to Islamic finance disputes in Malaysia between 1994 and 2010. The cases examined issues such as whether Bay al-Bithaman Ajil (BBA) contracts were valid and enforceable, whether banks could claim the full sale price in the event of default, and how to determine repayment amounts. The courts generally found that BBA contracts were valid sale agreements and banks were allowed to claim the full outstanding sale price, though in some cases the repayment amount was reduced to ensure it was equitable. The courts also affirmed their jurisdiction over disputes involving Islamic banks as corporate entities.
Lease Financing
Terminology
The advantages of leasing
Limitation of leasing
Types of Leasing
Financial lease
Operating lease
Sale and lease back
Leveraged leasing
Direct leasing
Other types
Problems of leasing in India
This document discusses leasing, which allows one party to use an asset owned by another party. There are two main types of leases: operating/service leases and financial/net leases. Operating leases provide maintenance services while financial leases do not. Leasing offers advantages over ownership like facilitating asset acquisition and improving financial position, but parties must consider tax and ownership implications.
Contract of Wadiah and its Application in Islamic BankingNabil Bello
This document discusses the concept of wadiah in Islamic banking. Wadiah refers to safekeeping of property in trust. There are two main types - wadiah yad al-amanah which is pure safekeeping with no liability for losses, and wadiah yad al-dhamanah which guarantees return of deposits. Wadiah is applied in savings accounts, where deposits are guaranteed but returns are at the bank's discretion, and current accounts, where deposits are used by the bank with no returns paid. While wadiah is widely used in modern Islamic banking, some argue this differs from the original concept of pure safekeeping of property in trust described in Islamic sources.
This document discusses the concept of Ijarah in Islamic finance. Ijarah refers to the leasing or renting of an asset where ownership remains with the lessor. The document outlines different types of Ijarah contracts and how they work, including operating leases where ownership remains with the bank, and financial leases where ownership may transfer to the lessee. It also discusses various terms and conditions that govern Ijarah contracts such as rental rates, security deposits, lease periods, and termination.
The document discusses the issue of Bai Bithaman Ajil (BBA) contracts as used in Islamic financing in Malaysia. It summarizes the conceptual model of BBA, which involves the deferred payment sale of an asset from a seller to a purchaser. The document then discusses 5 previous court cases related to BBA and the legal issues they raised. The cases analyzed whether the BBA structure qualified as a legitimate sale contract under Shariah or resembled interest-based financing. The document concludes by noting the Malaysian government strengthened regulations on Islamic finance to address legal uncertainties surrounding BBA raised by the court cases.
Bay al-dayn refers to the sale of debt in Islamic finance. It involves the sale and purchase of a quality debt, either to the debtor or a third party. There are differing views among Islamic scholars on whether debt can be sold to a third party. Proponents argue it can be allowed subject to certain conditions to avoid risks like gharar. Critics argue the sale of debt to non-debtors is prohibited due to issues like selling something one does not possess.
The document discusses the concept of Bai Bithaman Ajil (BBA), which is an Islamic financing technique that allows for the deferred payment of goods purchased. BBA involves the immediate delivery of an asset to the buyer while payment is postponed to a future date or paid through installments. The document examines the principles, evidence, objectives, mechanics, and pricing considerations of BBA transactions.
This document defines and discusses the concept of bay' al-tawarruq, an Islamic financing structure. It provides the definition, evidence from Islamic legal sources, key pillars and participants, types, conditions and a modern application of bay' al-tawarruq. Bay' al-tawarruq involves the purchase of a commodity on credit followed by the immediate resale of that commodity to a third party for a lower price in cash. The document outlines the different types and conditions that must be met for bay' al-tawarruq to be valid according to Islamic law.
Mudharabah is a partnership contract between two parties where one provides capital to the other to invest in a business venture. Any profits generated are shared between the parties according to a predetermined ratio, while losses are borne solely by the capital provider. The document defines mudharabah, provides evidence for it from the Quran and hadith, and outlines the key pillars, categories, conditions, differences from musharakah, and modern applications of mudharabah contracts.
This document discusses Islamic investment in equities markets. It begins by outlining the types of securities, including common stock and preferred stock. Common stock represents ownership in a company and provides rights to dividends and voting. Preferred stock has limited voting rights but priority claim to dividends. The document then examines the underlying Shariah contract of stocks, which is based on principles of Musharakah profit and loss sharing. While common stock is generally permissible, preferred stock faces restrictions. The document concludes by discussing various ways shareholders can be rewarded, such as cash dividends, bonus issues, and rights issues, all of which can be compliant with Shariah perspectives.
This document provides an overview of the key concepts and philosophy of Takaful, which is an Islamic insurance system based on mutual assistance. It discusses how risk management is viewed in Islam and the Quranic principles of preparing for hardship. Takaful operates based on participants contributing funds and jointly guaranteeing each other in case of need, as opposed to conventional insurance which is seen as risky. The document outlines the definitions and origins of Takaful, compares it to conventional insurance, and explains some of the investment principles and contract types used in Takaful like Mudharabah and Tabarru.
1) Mudarabah is a partnership agreement where one party provides capital while the other provides labor and management skills, with profits shared between the parties according to a predetermined ratio.
2) In mudarabah, the capital provider is called rabb-ul-maal and the manager is called the mudarib. The mudarib manages the business while the rabb-ul-maal does not interfere.
3) Mudarabah can be used by Islamic banks for investment purposes and financing projects, businesses, and private equity through profit-sharing with entrepreneurs. Deposits from customers to banks are treated as rabb-ul-maal funds to be invested by the bank as mudarib.
This document discusses Islamic financial planning and takaful (Islamic insurance). It begins by defining takaful and explaining how it differs from conventional insurance by being based on mutual assistance and contribution to a common fund. The document outlines the key concepts of tabarru' (donation) and mudharabah (profit-sharing) business models used by takaful operators. It then discusses how to determine the appropriate amount of takaful coverage needed based on a family's monthly expenses and existing financial resources. The document provides approaches like using a multiple of one's salary or assessing actual needs to estimate a maintenance fund size. It emphasizes the importance of choosing a takaful policy that matches one's specific needs and objectives
The document defines and discusses the concept of al-hiwalah, an Islamic contract that involves the transfer of debt from one party to another. It provides key details on al-hiwalah, including its definition, evidence and pillars supporting it in Islamic jurisprudence, categories, issues, and application. Examples are given to illustrate types of restrictions and conditions for a valid al-hiwalah contract.
The document defines and discusses the Islamic financing concept of al-ijarah. Some key points:
- Al-ijarah refers to a lease or rental contract in which one party allows another to use an asset for a fee. It is distinguished from a normal sale by having a specified time period.
- The pillars of al-ijarah include the owner (mu'ajjir), user (musta'jir), asset (ma'jur), benefit/usufruct (manfaah), fee (ujrah), and offer/acceptance (sighah).
- A major modern application is al-ijarah thumma al-bay', where a lease
Takaful is an Islamic insurance model based on mutual assistance and contribution. It avoids issues of conventional insurance like gharar (uncertainty), maisir (gambling), and riba (interest) by operating as a cooperative model where participants donate part of their contributions to a common fund to assist those who experience defined losses. The fund is managed by a company using mudarabah and wakala models to invest contributions and provide services while avoiding interest. Takaful can be used to insure various assets and risks like property, vehicles, goods, health and life.
1) Islamic banks obtain funds from deposits and use those funds to finance various approved investment activities like trade financing. More than 75% of funds come from deposits.
2) Financing must follow Shariah principles like prohibiting interest and uncertainty and balancing individual and societal needs.
3) The bank uses modes like murabahah, ijarah, mudharabah and musharakah with different structures for purchasing, leasing or jointly investing in assets and sharing profits and losses according to capital contributions.
This document provides information on various Islamic financing concepts, including Al-Ijarah, Al-Ijarah Thumma Al-Bai (AITAB), and their application in motor vehicle financing.
Al-Ijarah refers to a leasing or rental contract where the lessor provides the lessee use of an asset for a fixed rental payment. There are two types - Al-Ijarah 'Amal for hiring services or labor, and Al-Ijarah 'Ain for hiring assets. AITAB combines two separate contracts - an initial Ijarah contract followed by a sale contract (Bai') at the end of the lease period, allowing the lessee to purchase the asset
An Analysis of the Courts’ Decisions on Islamic Finance DisputesMahyuddin Khalid
The document summarizes several key court cases related to Islamic finance disputes in Malaysia between 1994 and 2010. The cases examined issues such as whether Bay al-Bithaman Ajil (BBA) contracts were valid and enforceable, whether banks could claim the full sale price in the event of default, and how to determine repayment amounts. The courts generally found that BBA contracts were valid sale agreements and banks were allowed to claim the full outstanding sale price, though in some cases the repayment amount was reduced to ensure it was equitable. The courts also affirmed their jurisdiction over disputes involving Islamic banks as corporate entities.
Lease Financing
Terminology
The advantages of leasing
Limitation of leasing
Types of Leasing
Financial lease
Operating lease
Sale and lease back
Leveraged leasing
Direct leasing
Other types
Problems of leasing in India
This document discusses leasing, which allows one party to use an asset owned by another party. There are two main types of leases: operating/service leases and financial/net leases. Operating leases provide maintenance services while financial leases do not. Leasing offers advantages over ownership like facilitating asset acquisition and improving financial position, but parties must consider tax and ownership implications.
1. Venture capital and seed capital provide financing to entrepreneurs in addition to guidance. Bridge financing provides short term loans to cover delays between project approval and funding disbursement.
2. Lease financing allows companies to use assets through rental payments rather than purchase, preserving cash. It provides flexibility but costs are generally higher than debt financing.
3. Financial leases are long term while operating leases are short term; financial leases transfer ownership to lessee while operating leases do not. Sale-leaseback involves selling an asset then leasing it back.
Car financing in islamic banks methodology and waysHassan Badar
Diminishing Musharakah is a partnership transaction where partners agree to gradually terminate their partnership by one partner purchasing the other's share. A Diminishing Musharakah auto financing involves: 1) bank and client jointly owning the asset and dividing the bank's share into units; 2) bank renting its share to the client; and 3) bank gradually selling units to the client until they own the asset. Diminishing Musharakah combines Musharakah, Ijarah, and sale transactions.
Ijarah means to give something for rent. It involves transferring usage of a non-consumable asset from the owner (lessor) to a lessee for a period at an agreed
Term loans are commonly used by small businesses to purchase equipment, buildings, or other fixed assets needed to operate. They typically have maturities of 1-5 years and require collateral. Interest rates can be fixed or variable. Lenders often include restrictive covenants in loan agreements regarding working capital, debt levels, dividends, management changes, asset sales, and additional borrowing. Common sources of term loans include banks, insurance companies, finance companies, the SBA, and other government agencies.
A lease is a contractual agreement between a lessor, who owns an asset, and a lessee, who uses the asset. There are two main types of leases from an accounting perspective: operating leases and capital leases. For operating leases, the asset is not recorded on the lessee's balance sheet, while lease payments are expensed over time. For capital leases, the asset and liability are recorded on the lessee's balance sheet similar to a purchased asset. Leases allow companies to acquire assets without large upfront cash outlays and provide off-balance sheet financing advantages.
Asset finance provides businesses with financing to purchase equipment and other assets. In 2018, the Finance and Leasing Association (FLA) provided over £33 billion in asset finance to UK businesses. Asset finance comes in various forms, including finance leases, operating leases, and hire purchase agreements. Each type has different characteristics in terms of ownership, tax treatment, and options at the end of the agreement. Choosing the right type of asset finance depends on factors like whether the business wants to own the asset ultimately. Asset finance can be used flexibly to meet business needs and is becoming increasingly important for SME financing.
This document discusses leasing, hire purchase, and venture capital. It defines leasing as a process where a firm obtains use of an asset by making tax-deductible payments over time. Hire purchase allows a buyer to take possession of an asset and pay for it over time in installments before gaining ownership. Venture capital provides financing to early-stage companies in exchange for equity, often in multiple stages from seed to expansion.
This document discusses leasing, hire purchase, and merchant banking. It defines leasing as a contractual arrangement where a lessee pays a lessor for use of an asset. There are different types of leases such as operating leases and financial leases. Hire purchase allows goods to be leased with an option to purchase. Merchant banking provides services like underwriting shares and project counseling for a fee and facilitates production and trade.
Lease financing involves a lessor allowing a lessee to use an asset by paying periodic rentals, with ownership remaining with the lessor. There are two main types of leases: finance leases transfer substantially all risks and rewards of ownership to the lessee, while operating leases do not. Lease financing provides advantages like assured income for lessors and tax benefits for lessees, but also disadvantages such as double taxation for lessors and lack of ownership for lessees.
This document provides an overview of leasing and hire purchase concepts. It discusses:
1) Leasing involves a lessor owning an asset and a lessee making periodic rental payments to use the asset, while hire purchase allows a buyer to pay for goods over time and eventually own them.
2) There are different types of leases - financial leases provide long-term ownership, operating leases are short-term, and leverage leases finance large assets.
3) Hire purchase agreements require a down payment, allow ownership after all payments, and interest payments are tax deductible for buyers.
1. Leasing is a way for businesses to finance plant, property, and equipment through a leasing agreement where three parties are involved: the lessor who provides financing, the lessee who receives the financing, and the seller of the goods.
2. Under a leasing agreement, the lessee first contacts the lessor to request financing for equipment. If approved, the lessee then contacts the seller while the lessor pays the seller and the equipment is transferred to the lessee. The lessee makes fixed monthly payments covering principal and interest to the lessor.
3. There are different types of leasing including sale-leaseback, financial/capital leases, and vendor programs. Financial le
The document provides an overview of the theoretical and regulatory framework of leasing in India. It defines key concepts and classifications of leases, such as finance vs operating leases. It notes that leasing in India is governed by various allied legislations rather than a single leasing law. The document also outlines the parties, terms, and documentation involved in lease agreements, as well as the advantages and limitations of leasing.
This document provides an overview of leasing and hire purchase. It defines leasing as a contract where the lessor gives the lessee the right to use an asset for an agreed period in exchange for lease rentals. The key advantages of leasing are saving capital, flexibility, cash flow planning and improved liquidity, while disadvantages include commitment to the contract period and higher fixed costs. Hire purchase allows a purchaser to pay for goods in installments over time, with ownership transferring once fully paid. The document also discusses various lease and hire purchase terms, the history of leasing in India, accounting treatment and myths about leasing.
Ijarah is a lease contract that allows the transfer of ownership of an asset to another party for an agreed upon rental payment over a specified period of time. There are two main types of Ijarah: operating Ijarah, which does not include transfer of asset ownership at the end of the lease, and financial Ijarah (Ijarah Muntahia Bittamleek), where ownership does transfer to the lessee. The basic rules of Ijarah require that the rental amount and lease period be clearly defined upfront. Diminishing Musharakah is a partnership concept where one partner's ownership stake gradually decreases over time as the other partner purchases more shares.
This document defines leases and outlines the key parties and types of leases. It discusses the main reasons companies utilize leasing, such as lower monthly payments and protection against asset obsolescence. However, leasing is not always the best financial option, as it can be used to avoid capital expenditure controls or make a company's financial statements appear stronger than they are through off-balance sheet financing. Regulatory bodies have provided guidelines on distinguishing between capital/finance leases, which must be recognized as assets and liabilities, and operating leases.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
Understanding how timely GST payments influence a lender's decision to approve loans, this topic explores the correlation between GST compliance and creditworthiness. It highlights how consistent GST payments can enhance a business's financial credibility, potentially leading to higher chances of loan approval.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
Vicinity Jobs’ data includes more than three million 2023 OJPs and thousands of skills. Most skills appear in less than 0.02% of job postings, so most postings rely on a small subset of commonly used terms, like teamwork.
Laura Adkins-Hackett, Economist, LMIC, and Sukriti Trehan, Data Scientist, LMIC, presented their research exploring trends in the skills listed in OJPs to develop a deeper understanding of in-demand skills. This research project uses pointwise mutual information and other methods to extract more information about common skills from the relationships between skills, occupations and regions.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
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2. DIFFERENCE B/W FINANCIAL
LEASE & ISLAMIC LEASE
Description Conventional banking Islamic banking
Penalty on delay rent Income of the lessor Penalty shall be used for
charitable purpose
Rental due Before possession After Possession
Pre rental before the
delivery of leased asset
can be possible Prohibited and haram
Even no contravention on
the part of the lessee,
the lessor can terminate
the contract unilaterally
Yes No
3. Asset Securitization
• the lessor owns the leased asset, he can sell the asset (whole
or part) to a third party and my replace the seller in the rights
and obligation of the lessor with regard to the purchased part
of the asset.
4. Benefits Of Ijarah
• One of the most important benefits of ijara for a lessee is that,
by allowing 100% financing, it enables the lessee to conserve
his capital and even channel it to other revenue-making
ventures. As ijara implies borrowing without interest, the
lessee’s capital becomes conserved on another front as well.
Another one of the critical benefits of ijara for a lessee stems
from the inherent simplicity of the transaction process—the
lessee gets to enjoy the right to use the asset specified in the
contract and reap its benefits immediately after making the
first rental payment.
5. Benefits Of Ijarah
• The benefits of ijara for a lessee become reflected on his
balance of payments statement as well. As this mode of
financing is not treated as debt financing, it does not get
reflected as a “liability” in the lessee’s balance sheet and thus
is left out of the debt ratios.
• So, when bankers or other loan givers are determining
financing limits, the lessee can hope to enter into other
leasing agreements without harming his overall debt rating.
Also all payments made as part of the ijara leasing
agreement are considered to be operating expenditure and so
are fully exempt from taxation.
6. Benefits Of Ijarah
• One of the other notable benefits of ijara for a lessee is that
this financial agreement allows both parties to negotiate the
amount of rental payment.
• In a dynamic business world, this flexibility proves to be
immensely beneficial by allowing both the lessee and the
lessor to modify the rental arrangement to account for
economic fluctuations and changes in fiscal and monetary
policies
7. Benefits Of Ijarah
• There are other practical benefits of ijara for a lessee as well,
especially in instances where the lessee is renting a piece of
equipment. The ijara mode of financial agreement is the most
feasible choice when a lessee wants to rent a piece of
equipment only for a short period of time.
• In such instances, the benefits of ijara for a lessee arise from
the fact that the lessee does not have to bear the depreciating
costs of the equipment as per normal accounting principles.
8. Rizk
• In Islamic leasing or ijara, the leased asset remains in the risk
of the lessor throughout the ijara period, in the sense that any
loss, damage or loss caused by the factors beyond the control
of the lessee shall be borne by the lessor.
• it is very important for the bank to bear a certain amount of
risk in order that its profits are deemed legitimate in the eyes
of Shari'a. All the risk and liabilities emerging from the
ownership of the asset are to be borne by the lessor (bank)
while the liabilities arising from the use of the leased assets
are to be borne by the lessee (customer).
9. continue
• The bank or financial institution is not allowed to charge the
customer an additional amount in case of delays in payment
of the rentals since it is considered Riba. As a result, Islamic
scholars have found a solution in order to prevent
consequences resulting from the misuse of this prohibition.
They suggested that the customer could be asked to pay a
certain amount to charity
10. Nature of Asset
• It is important to note that ijara is permissible only in case of
a certain category of assets. Money and consumables are not
leasable assets.
• If money or consumables are leased, such contract will be
deemed to be a loan and subject to rules of riba.
• The leased asset must be specified and identified by the
parties
11. Fixed and Floating Rates
• In ijara, the leasing rate or the rental must be known at the
time of contracting. The rates must be predetermined for the
whole period of ijara.
• However, since it is risky for banks and financial institutions to
set a fixed rent for the whole period due to the volatility of
market conditions it is possible to divide the ijara period into
several smaller intervals with varying but predetermined rates
• Thus, a floating rate ijara is admissible provided such a rate
for each of the phases is specially agreed upon at the time of
affecting an ijara
• Another option also available for the bank or financial
institution is to set a short-term Ijara contract that may be
renewed. Both parties are not obliged to accept the new
terms and have the freedom to refuse the new contract
12. Fixed and Floating Rates
• Floating rate ijara may be desirable considering the changing
market and economic conditions, especially if the ijara period
is relatively long. Floating rate ijara may be made possible by
inserting a rent adjustment clause in the ijara contract. The
rate adjustment may be in the nature of a specified rent
escalation at the end of an interval of say, six months or one
year; or may be indexed to a macroeconomic indicator, such
as, consumer price index (CPI) or even a benchmark interest
rate, such as, the London Inter Bank Offering Rate (LIBOR).
• More important however, is the possible existence of
prohibited excessive gharar in the contract due to
indeterminateness of the leasing rate at the time of
contracting, since the value of index cannot be predicted in
advance.