What is Ijara sukuk?

Ijarah Sukuk are certificates of equal value which are issued by the owner of an existing property or asset either on his own or through a financial intermediary, for the purpose of leasing it against a rental from the subscription proceeds. After subscription, the underlying becomes owned by the Sukuk holders.

What is difference between lease and Ijarah?

Under leasing, lessor is not responsible for making good the asset or a portion of asset which is not fit for use, while under Ijarah, lessor is responsible for maintaining asset in working condition.

What is Ijarah leasing?

Ijarah is a concept used in Islamic commerce. Ijarah denotes a contract where one party transfers the right to use an item he owns to another party for a specified period in exchange for an agreed consideration. Colloquially, Ijarah is often called ‘Islamic leasing’.

What is the difference between Ijara and Ijara Wa Iqtina?

In Islamic finance, al Ijarah does lead to purchase (Ijara wa Iqtina, or “rent and acquisition”) and usually refers to a leasing contract of property (such as land, plant, office automation, a motor vehicle), which is leased to a client for stream of rental and purchase payments, ending with a transfer of ownership to …

What is sukuk Murabaha?

In a sukuk al-murabaha transaction: A special purpose vehicle (SPV) buys from a supplier an asset the borrower has identified. The SPV finances the purchase of these assets with the proceeds of a sukuk issuance. The SPV sells the asset to the borrower for the original purchase price plus a pre-agreed profit.

How is sukuk calculated?

  1. In order to find sukuk price, we need to identify its present value. Therefore, the formula is as follows: Sukuk Price =
  2. The above calculation happens if the discount rate is variable. If the discount rate is constant, the sukuk price is given as: = C ( 1 + R ) + C ( 1 + R ) 2 + …

Who has the title of the asset in Ijarah lease until it ends?

Contracting Parties: The contracting parties involved in Ijarah are the lessor and the lessee. Lessor is the one who owns the asset and lessee is the one to whom the asset is given on lease.

How many types of Ijarah are there?

In terms of its modus operandi, ijarah can be classified as operating ijarah and financial ijarah: Operating ijarah (ijarah tashgheeliah): Conventionally, operating ijarah used to be the one and only type of ijarah. According to operating ijarah, an owner of a property leases it to others for a specified period.

What are types of Ijarah?

Two common Islamic Ijarah products are Ijarah Thumma Al-Bay’ (“AITAB”) and Ijarah Muntahiya Bil-Tamleek (“IMB”). AITAB is a lease arrangement that ends with a sale at the end of the lease term. As such, AITAB consists of two contracts: (i) contract of leasing (Ijarah) and (ii) sale contract (bay’).

What is the difference between murabaha and Ijara?

The main difference between these two types is that with a Murabaha mortgage the property will immediately be registered in your name, while with an Ijara mortgage, you can only rent the property from your sharia-compliant lender, where you’d have to pay a monthly rent and at the end of the agreed term or once the …

What is sukuk Mudharabah?

A form of sukuk derived from the mudaraba partnership structure. In a sukuk al-mudaraba: The party seeking financing (mudareb) enters into an agreement with a special purpose vehicle (SPV) to manage certain assets owned by the SPV. The SPV acquires the assets to be managed using the proceeds of a sukuk issuance.

What is the difference between bond and sukuk?

Sukuk are Sharia-compliant financial certificates through which investors gain partial ownership on an issuer’s assets until the Sukuk maturity date. While Bonds are financial certificates through which investors lend money to the issuer, indicating an obligation for repayment at maturity date.