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Ijarah Term Financing-i is based on the Shariah contract of Ijarah Muntahia Bi al-Tamlik (leasing ending with ownership).
Features
  • Under this contract, the customer will sell the beneficial interest of the assets/properties to the Bank and the Bank will pay the customer the purchase price which is equivalent to the financing amount
  • The Bank will then lease the Ijarah assets/properties to customer at an agreed rental amount for a specific tenor
  • Upon expiry of the leasing period the Bank will sell the assets to the customer at a price agreed by both parties

Elements/Tenets of Ijarah Muntahia Bi al-Tamlik

Lessor

  • The Bank (lessor) is the beneficial owner of the asset/property who grants the lease.

Lessee

  • The customer (lessee) who leases the asset/property from the Bank

Subject Matter of the Lease

  • The leased (Ijarah) asset/property
  • The lease payment (rental) is the agreed rental over a specified leasing period and the usage of the benefit (usufruct)

Contract Documents

  • The offer and acceptance of the Ijarah contract agreement
grants
Purpose of Financing
  • Finance the purchase of leasable and completed property/asset such as building, vessel, plane or land
  • Re-finance the above properties/assets

Type of Facility

  • Term Financing-i

Eligibility

  • Existing and new eligible individual and non-individual customers, local and foreign

Contract

  • Ijarah Muntahia bi al-Tamlik (leasing ending with ownership)

Underlying Assets

  • Leasable and Completed Assets (to be purchased or owned by customer) such as landed property, building, vessel, commercial vehicles, etc
Financing Amount and Margin of Advance
  • Based on credit policies for Islamic Term Financing

Lease Term / Tenure

  • Based on customer's requirements and credibility
Profit Rate / Pricing

The following is type of pricing for Ijarah Term Financing-i :-

  • Fixed rate
    The rate will remain fixed throughout the financing tenure.
  • Floating rate
    BFR + margin/spread (at par with the conventional rate).
  • A combination of fixed rate and floating rate.

Note: There is no Selling Price element for Ijarah Term Financing-i. Thus the Selling Price Rate is not applicable.  

Mode of Rental Payment

Bullet or lump-sum payment;
Periodically i.e. monthly, quarterly, half-yearly and yearly

Profit Computation Method
  • Daily Rest/Monthly Rest

Profit Charged

  • Daily Rest (Month End)
  • Monthly Rest (Month End)
Disbursement
  • As per agreed terms between the Bank and the customer
Prepayment / Prepayment Fee
  • Prepayment is allowable during the lease/financing period
  • However, the prepayment fee is not allowed to be charged to customer
Processing Fee
  • Allowable to be charged only on approved financing for commercial and industrial properties i.e. factories, plants or housing
Costs and Expenses
  • Customer is responsible for all costs and expenses related to the maintenance of the Ijarah Asset
Takaful Coverage

Customer is responsible for cost of Takaful against fire/burglary on:-

  • The asset/property leased from the Bank
  • The asset/property  charged/assigned/pledged to the Bank
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