Ijarah means leasing of an asset pursuant to a contract under which a specified permissible benefit in the form of a usufruct is obtained for a specified period in return for a specified consideration. It is a Manfa‘ah (usufruct) type of contract whereby a lessor (owner) leases out an asset to its customer at an agreed rental fee and pre-determined lease period upon the contract. The ownership of the leased equipment remains in the hands of the lessor.
For Islamic banking products, they are commonly associated with a promise by the lessor to transfer ownership at the end of the Ijarah period via a separate sale agreement or gift.
Commonly used for: KFH Auto Ijarah-i, KFH Ijarah Muntahiah Bi Tamlik Asset Acquisition Financing-i, KFH Ijarah Muntahiah Bi Tamlik Asset Backed Financing-i.