Episode 3: Critiquing Rent-To-Own (Ijarah Muntahiya Bittamleek) and Diminishing Partnerships (Musharakah Mutanaqisa)


  1. Some points without proper sequence:
    1- Islamic bank (IB) does not sell money (or does not create additional money by lending money). Instead, IB makes additional money by engaging in purchase and sale of the property.

    2- Under Ijarah structure, the beneficial ownership rests with IB (the presentation (in the main article) is not appropriate). IB generates additional income in shape of rent.


  2. Salam Kashif. Thanks for your comment.

    1-IB is engaged in financing. That’s the service they provide. the purchase and sale of property is simply to obscure the true nature of what is going on. If the customer was interested in the purchase of property they would have went directly to a realtor, not the bank. They went to the bank because they needed financing.

    2-Assuming this point is true, which it isn’t, it doesn’t matter. The service the bank is providing is financing. In return for this service the bank is receiving a promise of benefit from the financed. call it rent, call it a fee, call it a tree, it doesn’t matter. It’s Riba. A duck is a duck is a duck.


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