Ijara Mode-Hire Purchase Under Sirkatul Meelk (HPSM)

Under this mode Bank or investment company may supply implements/ equipment/goods on local rental basis. Hire purchase is a special type of contract, which includes been developed through practice. Shirkat means partnership. Shirkatul Melk means share in ownership. When several persons supply equity, purchase an asset, own the same jointly, and share the benefit as per agreement and endure the loss in proportion with their respective collateral, the contract is named Shirkatul Melk agreement.

As per process of transfer of possession and legal title of the part possessed by the Bank is transferred to the other partner, the sale contract might be of various forms. 2. Hire Purchase under Shirkatul Melk Through transfer of legal name (sale) by the end of hire period for a token factor.

3. Hire Purchase under Shirkatul Melk through transfer of legal name (sale) by the end of Hire period for payment of a specified total the hire by the hirer. 4. Hire Purchase under Shirkatul Melk through transfer of legal name (sale) period to the finish of the hire term for a price that is the same as the rest of the ijarah /rental instruction. The term Ijarah has been derived from the Arabic works (Air) and (Ujrat) this means consideration, return, wages or rent. This is actually the exchange value or consideration, return, wages, rent of service of an ASSET.

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Ijarah has been defined as a contract between two parties, the Hire and Hirer where the Hirer likes or reaps a specific service or advantage against a specified consideration or rent from the asset possessed by the Hire. It is a hire contract under which a certain asset is hired out by the Hire to a Hirer against fixed rent or leases for a specific period.

It is permissible for your client to offer an order to buy by the Bank particular goods deciding its specification and committing himself to choose the same form the Bank on Bai’Murabaha i.e. cost plus arranged profit. It really is permissible to help make the guarantee binding upon the Client to purchase from the lender, that is, he could be to either fulfill the promise or even to indemnify the damages triggered by breaking the promise without excuse. It is permissible to consider cash/collateral security to Guarantee the implementation of the promise or even to indemnify the damages.

It is also permissible to document the debt causing form Bai’Murabaha by a Guarantor, or a mortgage, or both like any other personal debt. Mortgage/Guarantee/Cash Security may be obtained prior to the signing of the Agreement or during signing the Agreement. After purchase of goods the lender must bear the chance of goods until those are actually delivered to the Client.