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Instruments of Islamic banking in operation This is a research-based article dealing with respective(a) aspects of Islamic finance and its wider application in todays banking environment. The article was divided in five parts; part-I, II, triad and IV already published. This is the final part-V (concludes) By Dr Shahid Hasan Siddiqui Ijarah Muntahia Bittamleek Islamic banks do non purchase / maintain the assets for leasing as in the eccentric of operating bustal; they normally purchase the asset in response to specific requests from customers to get the asset on belong that stop overs with purchase by and by the bring term expires. This conduct of possession grapples place through gift by lessor at the end of the use up period or at a keepsake consideration or for other amount(s) specified in the lease agreement. The Shariah scholars recommend that lease agreement should not film a pre-condition of sale or gift after the lease period. The principle, according t o them, is that a biased promise to move in into a sale contract at a future day of the month is allowed whereby the promisor is ricochet to fulfill the promise, solely the promisee is not bound to enter into actual purchase contract. It is grievous to note that the scoop out nomenclature for normal ijarah operations by Islamic banks is ijarah muntahia bittamleek and not ijarah wa iqtina. Accounting and Auditing administration of Islamic Financial Institutions (AAOIFI) has as well used this terminology for leasing operations under Islamic banking system. It implies that principally the transaction is simply one whereby the lessor leases the asset and fixes the rental in the way that during the lease period its total cost as also rent is duly received. The second part is only a unilateral promise not binding on the promisee and as such it is not a transaction until in truth entered into by the parties. AAOIFI Standard on Ijarah provides for promise by the lessor, spo t many Islamic banks, as in the case of Paki! stan, take toil from the lessee and deem it...If you want to get a abounding essay, format it on our website: OrderCustomPaper.com

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