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Practical Islamic Finance Podcast

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

Date: May 17, 2015Author: Rakaan Kayali 2 Comments
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halalHalal FinancingharamHome financingIjarah Muntahia BittamleekIslamic BankingIslamic FinanceMusharakah MutanaqisaRiba-Free SolutionsShari'a Compliant Home FinancingSharia BoardSharia ComplianceSharia-Compliant Financing

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Someone trying to look beyond capitalism who is strongly influenced by his Muslim faith in his search for solutions. View all posts by Rakaan Kayali

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2 thoughts on “Podcast Episode 3: Critiquing Rent-To-Own (Ijarah Muntahiya Bittamleek) and Diminishing Partnerships (Musharakah Mutanaqisa)”

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  1. KASHIF MUHAMMAD says:
    November 27, 2016 at 6:05 pm

    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.

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  2. Rakaan Kayali says:
    November 28, 2016 at 5:49 pm

    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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