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“IJARAH”
BY Maulana Taqi Usmani

Introduction

In this article Maulana taqi usmani the scholar has

discussed the topic ijarah through which he enlightened more aspects
of ijarah which is known as leasing its worldly known thing with
different names all over the world but it is more frequently work in
Islamic country and ijarah is one of the known term of modes of Islamic
financing .

Ijarah has many steps which we will discuss further.

What is Ijarah?
Ijarah is a term of Islamic fiqh. Lexically,
it means ‘to offer some thing on hire’. Within the Islamic jurisprudence,
the term‘ijarah’ is used for 2 one of a kind conditions. In the first place,
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it way ‘to employ the offerings of a person on wages given to him as

a consideration for his employed offerings.’
The employer is called musta’jir at the same time
as the employee is called ajir.

There are types of Ijarah

1)

Therefore, if A has employed B in his workplace as a manager or

as a clerk on a monthly revenue, A is musta’jir, and B is an
ajir. further, if A has employed the offerings of a porter to
carry his luggage to the airport, A is a musta’jir even as the porter
is an ajir, and in both cases the transaction between the events is
called as ijarah. This sort
of ijarah includes every transaction wherein the services of a
person are hired via a person else. He can be a doctor, a legal
professional, a instructor, a labourer or any other individual who
can render a few treasured services. each one of them can
be known as an ‘ajir’ in step with the terminology of
Islamic regulation, and the person who hires
their offerings is called a ‘musta’jir’, whilst the wages paid to the
ajir are referred to as their ‘ujrah’

2)
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The second sort of ijarah pertains to the usufructs

of belongings and properties, and now not to the services of humans.
‘Ijarah’ in this sense approach ‘to switch the usufruct of a
selected property to every other individual in alternate for a hireclaimed
from him.’ In this situation, the term ‘ijarah’ has similarities to the
English time period ‘leasing’. Right here the lessor is known as ‘mu’jir’,
the lessee is referred to as ‘musta’jir’ and the hire payable to the lessor
is known as ‘ujrah’.

Finding
Both these types of ‘ijarah’ are thoroughly discussed within
the literature of Islamic jurisprudence and every certainly one of them
has its personal set of guidelines. However for the reason of the
existing book, the second kind of ijarah is more relevant, because it's
far commonly used as a form of funding, and as a style of
financing also.

The policies of ijarah

The policies of ijarah, within the feel of leasing, could be
very much analogous to the policies of sale, because in each casessome
thing is transferred to every other individual for
a valuable consideration. The handiest distinction between ijarah and
sale is that within the latter case the corpus of the property is
transferred to the purchaser, even as in the case of ijarah, the corpus of
the assets stays within the possession of the transferor, however most
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effective its usufruct i.e. the right to use it, is transferred to the lessee.
The guidelines of Ijarah, in the sense of leasing, may be very analogous
to the guidelines of sale,due to the fact in both cases some thing is
transferred to every other individual for a treasuredconsideration.
The best distinction among Ijarah and sale is that inside the latter case
thecorpus of the belongings is transferred to the patron, even as within
the case of Ijarah, the corpus of the belongings stays within
the ownership of the transferor, however only its usufruct
i.e. the right to apply it, is transferred to the lessee.

Basic Rules of Leasing:

 Leasing is a contract wherein the proprietor of some
thing transfers its usufruct to
some other character for an agreed period, at an
agreed attention.
 The situation of lease need to have
a precious use. consequently, things having no usufruct
in any respect can not be leased
 it is essential for a legitimate settlement of hire that the corpus of
the leased property
remains within the possession of the vendor, and only its usufruct
is transferred to the
lessee. thus, some thing which can not be used with
out consuming cannot be leased out.
therefore, the rent can not be affect in admire of money,
eatables, gasoline and
ammunition and so on. due to the fact their
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use isn't possible until they're consumed. If

something of this nature is leased out, it will likely be deemed to
be a mortgage and all of the rules
regarding the transaction of loan shall for that reason practice.
Any lease charged on this
invalid lease will be interest charged on a loan.

 As the corpus of the leased property remains in the ownership of

the lessor, all the liabilities emerging from the ownership of the
lessor, all the liabilities emerging from the ownership shall be
borne by the lessor, but the liabilities referable to the use of
property shall be borne by the lessee.

 The period of hire should be determined in clean phrases.

The lessee can not use the leased asset for any purpose other
than the cause
specific in the hire agreement. If no such cause is targeted inside
the settlement, the
lessee can use it for something cause it's far used in
the regular direction. but, if he
needs to apply it for an bizarre cause, he cannot do until the
lessor lets in him in
express phrases.

 The lessee is susceptible to compensate the lessor

for every damage to the leased asset
as a result of any misuse or negligence at the a part of the lessee.
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 The leased asset shall be remained in the chance of the lessor at

some point of the rent
length inside the experience that any harm or loss resulting
from the factors beyond the manage of
the lessee shall be borne by using the lessor.
nine.

 A belongings jointly owned with the aid

of or greater individuals may be leased out, and the apartment
shall be distributed among all of the joint owners in line with the
percentage in their
respective stocks in the property.

 A joint proprietor of a property can hire his

proportionate proportion to his co-sharer simplest,
and now not to another man or woman.
Eleven. it's miles vital for a valid rent that the leased asset
is absolutely identified by using the
parties

 The rental have to be determined at the time of agreement for

the complete length of lease.
it is permissible
that special amounts of rent are fixed for specific levels in the
course of the
lease duration, provided that the
amount of rent for every section is in particular agreed
upon on the time of affecting a lease. If the rent for
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a next segment of the hire

length has no longer been determined or has been left at the
option of the lessor, the lease is
not legitimate.

Lease as a Mode of Financing:

Like Murabaha, rent is
not originally a mode of financing. it's miles absolutely a transaction
intended to transfer the usufruct of a belongings from
one person to any other for an agreed
period against an
agreed attention. however, certain monetary establishments have
adopted leasing as a method of financing rather than long term lending
on the idea of
interest. This kind of rent is normally referred to as the ‘monetary rent’
as outstanding
from the ‘operating lease’ and plenty
of simple functions of actual leasing transaction have
been allotted with therein.
when hobby-unfastened economic institutions were mounted within
the near past, they discovered
that leasing is a identified mode of finance all through the world. on the
other hand,
they realized that leasing is a lawful transaction in line with Shari’ah
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and it may be
used as an interest-loose mode of financing. therefore, leasing has
been followed with the aid of the
Islamic monetary institutions, but only a few of them paid attention to
the ‘economic
hire’ has some of characteristics extra just like interest than to
the actual rent
transaction. that is why they commenced the use
of the identical version agreements of leasing as
had been in fashion some of
the conventional financial institutions without any amendment,
even as some of their provisions had been not in conformity with
Shari’ah.

The Commencement of Lease:

in contrast to the settlement of sale, the agreement of Ijarah may
be affected for a destiny
date. as a result, whilst a forward sale isn't always allowed in Shari’ah,
an ‘Ijarah’ for a destiny
date is allowed, at the circumstance that the rent will
be payable handiest after the leased
asset is delivered to the lessee.
In maximum cases of the ‘financial lease’ the lessor i.e.
the financial institution purchases
the asset thru the lessee himself. The lessee purchases the asset on
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behalf of the
lessor who can pay its price to the supplier, either without
delay or through the lessee. In a few
rent agreements, the hire commences on the very day on which
the fee is paid via
the lessor, no matter whether or not the lessee has affected charge to
the provider and
taken shipping of the asset or no longer. it is able to suggest that
lessee’s liability for the hire starts
before the lessee takes transport of the asset. This is not allowed in
Shari’ah, as itquantities to charging hire on the money given to
the customer that's nothing but
interest, natural and simple.

Different Relations of the Parties:

It must be certainly understood that after the lessee himself has been
entrusted with
the purchase of the asset intended to be leased, there
are separate relations
between the institution and the customer which come into operation
one after the alternative. In
the primary example, the customer is an agent of
the group to purchase the asset on
latter’s behalf. At this degree, the
relation among the parties is nothing greater than the
relation of a most important and his agent. The relation of lessor and
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lessee has no longer yet come

into operation.

Expenses Consequent to Ownership:

as the lessor is the proprietor of the asset, and he has purchased it from
the supplier
via his agent, he's liable to pay all the expenses incurred within
the system of its
purchase and its import to the us of a of the lessor. therefore, he
is vulnerable to pay
the freight and the customs duty etc. He can, of course, consist of some
of these costs in
his fee and might take them
into consideration while solving the rentals, however as a count
number
of precept, he is liable to endure a lot of these prices as
the proprietor of the asset. Any
agreement to the opposite, as is observed within
the conventional economic rentals, isn't in
conformity with Shari’ah.

Liability of the Parties in case of Loss of Asset:

As stated in the primary principles of leasing, the lessee is liable for any
loss brought on to the asset by using his misuse or negligence. He can
also be made prone to the
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wear and tear which usually happens throughout its

use. but he cannot be made susceptible to a
loss caused by the factors beyond his manage. The agreements of
the conventional
‘financial hire’ generally do not differentiate among the
two establishments. In a lease
primarily based at the Islamic standards, each the conditions need
to be handled one at a time.

Variable Rentals in Long Term Leases:

inside the long time lease agreements it's miles in the main no longer in
the advantage of the lessor to repair
one amount for rent for the entire length of rent, due to the
fact the market conditions
change sometimes.
In this example the lessor has two alternatives:
a) He can contract rent with a condition that the rent shall
be expanded therefore
to a targeted percentage (e.g. 5%) after a specific duration (like twelve
months).
b) He can agreement rent for a shorter length and then the parties can
renew the
lease at new phrases and by using mutual consent,
with complete liberty to every considered one of them to
refuse the renewal, wherein case the lessee is sure to vacate the
leased assets and
go back it returned to the lessor.
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those two options are available to the lessor in keeping with the
classical rules of Islamic
Fiqh. but, some modern scholars have allowed, in long term leases, to
tie
up the condo quantity with a variable benchmark that's so
9aaf3f374c58e8c9dcdd1ebf10256fa5 and welldefined
that it does now not go away room for any dispute. as an instance, it's
far permissible
in keeping with offer in the lease agreement that during case of
any increase in the taxes
imposed through the government at the lessor, the lease will
be accelerated to the volume of
the identical amount. in addition it's far allowed by using them that the
yearly growth inside the lease is tied up with the fee of
inflation. Therefore if there may be an increase of 5% in the rate of
inflation, it'll result in an increase of five% in the hire as properly.

Penalty for Late Payment of Rent:

In a few agreements of economic rentals, a penalty is imposed on
the lessee in case
he delays the fee of hire after the due date. This penalty, if intended to
add to the
income of the lessor, isn't warranted by means of the Shari’ah.
The motive is that the hire after
it becomes due, is a debt payable via the lessee, and is concern to all
the regulations prescribed for a debt. A monetary price from a debtor
for his late price is exactly the riba prohibited by way of the Holy
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Qur’an. therefore, the lessor can't price an additional amount in case

the lessee delays fee of the rent

Termination of Lease:
f the lessee contravenes any time period of the settlement, the lessor
has a proper to
terminate the lease contract unilaterally. however, if there's no
contravention on the
part of the lessee, the lessee can't be terminated without mutual
consent. In a few
agreements of the ‘monetary hire’ it's been noticed that the lessor has
been given
an unrestricted energy to terminate the rent unilaterally each
time he wishes, according to his sole judgement. that is once
more opposite to the standards of Shari’ah

Insurance of the Assets:

If the leased belongings is insured below the Islamic mode of takaful,
it must be at
the expense of the lessor and no longer on the expense of the lessee, as
is generally provided
inside the agreements of the cutting-edge ‘monetary rentals’.

The Residual Value of the Leased Asset:

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some other critical feature of the current ‘financial leases’ is that

after the expiry of
the rent length, the corpus of the leased asset is commonly transferred
to the lessee. As
the lessor already recovers his fee alongwith a
further profit thereon, that's
generally same to the quantity of hobby that can had been earned on
a mortgage of
that quantity advanced for that period, the lessor has no in
addition interest in the leased
asset. then again, the lessee wants to preserve the asset after the
expiry of the
leased period.

Sub-Lease:
f the leased asset is used otherwise through extraordinary customers,
the lessee cannot sub-lease
the leased asset besides with the express permission of the lessor. If
the lessor allows
the lessee for subleasing, he may additionally sublease it. If
the lease claimed from the sub-lessee is
identical to or less than the hire payable to
the owner / authentic lessor, all the diagnosed
colleges of Islamic jurisprudence are unanimous on the permissibility of
the sublease.
but, the opinions are one of a kind in case the hire charged from the
sublessee is
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higher than the rent payable to the owner. Imam al-Shafi’i and a
few other pupils
permit it and keep that the sub lessor may additionally experience the
excess acquired from the sublessee.
that is the preferred view in the Hanbali college as nicely. then again,
Imam abu Hanifah is of the view that the surplus obtained from the sub
lessee on this
case isn't always permissible for the sub –lessor to hold and he
will must provide that surplus
to charity. but, if the sub-lessor has developed the
leased belongings with the aid of adding
some thing to it or has rented it in a forex specific from the foreign
money wherein he
himself will pay rent to the owner / the authentic lessor, he
can claim a better rent from his
sub-lessee and might experience the surplus.

Assigning of the Lease:

The lessor can sell the leased belongings to a 3rd birthday
party whereby the relation of
lessor and lessee will be established among the brand
new proprietor and the lessee.
but, the assigning of the rent itself (with out assigning
the possession inside the
leased asset) for a economic attention is not permissible.
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Securitization of Ijarah:
The arrangement of Ijarah has an awesome ability of securitization
which may additionally assist
create a secondary market for the financiers on the basis of
Ijarah. since the lessor in
Ijarah owns the leased belongings, he can promote the asset,
in whole or in part, to a third partywho might also purchase it and
can update the vendor within the rights and duties of the
lessor with reference to the bought part of the asset.

Conclusion:
This study allows in expertise that how Ijarah affects on Islamic banking.
Being a Muslim is our obligation to
keep away from all the ones sports which can be prohibited in
Islam hobby is one of them in our society human
beings don’t understand
what honestly Islam says approximately transactions. Shariah supply us
a facility of Islamic mode of finances our goal
is to define how economic business enterprise like Islamic Banks
implements on it and facilitate their clients. The
records was amassed by means of the businessman’s &
Banks through followed the questionnaire.
three checks had been carried out Cronbach‟s Alpha, correlation and
regression. Cronbach‟s Alpha suggests that
questionnaire is dependable. From the
regression analysis it shows that version is a good healthy. by means
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of applying
correlation method all relationships had been observed full-size.
There is strong relationship between Ijarah and
traditional rent and Islamic Banking.