LEASING
Leasing is, in essence, an agreement
between two parties for the rental of asset. It allows one
party, the Lessee, to use an asset owned by another party,
the Lessor. In this regard, leasing is equivalent to an
Ijara, an Islamic mode of acquiring. The lessee makes the
economic use of the lessor’s assets and pays in the form of
a rental for this privilege.
MODARABA
The term Modaraba is an Arabic term and
implies a contract between two parties, whereby one party,
the Rab-ul-mal entrusts money to the other party called the
Mudarib, to put in his management expertise and utilise it
in agreed manner. Profits of the Modaraba are shared in a
pre-agreed ratio and losses in the proportion of the capital
invested.
An agreement between two or more persons
whereby one or more of them provide finance, while the other
provide entrepreneurship and management to carry on any
business venture whether trade, industry or service with the
objective of earning profits. The profit is shared in an
agreed proportion. The loss is borne by the financiers only
in proportion to their share in the total capital.
MUSHARAKA
An equity participation agreement between a
financial institution and a client for effecting a certain
operation within an agreed period of time. Both parties
contribute to the capital of the operation in varying degree
and agree to divide the net profits or losses in proportions
agreed upon in advance.
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