A brief overview on the process of Ijaara

1. Ijaara

2. Notable Scholars of Islamic
Finance
Abdulkader Thomas

 SHAPE Financial Corporation
Mufti Taqi Usmani

 (Dar Ul Uloom Karachi)
Molana Dr. Imran Ashraf Usmani

 (Shariah Advisor Meezan Bank)
Molana Dr. Ijaz Samdani

 (Darululoom Karachi)

3. Islamic Finance History
Developed in mid 8th century

 Considered the early form of capitalism
 Created many modern banking solutions
○ Checks, partnerships, corporations, trusts, etc
.
Modern Islamic finance

 Based mostly in the Middle East
 Steady growth rate of approximately 10-15%

4. Conflict of “Interest”
Religion versus environment

 Required to engage in Islamic finance
solutions
 Virtually no viable Islamic solutions exist in
the current environment
Need for Islamic institutions

 Provide relief for conflict of interest

5. Western Banking System
Dollar

• Dollar is the Asset
• Charges for the Use of
the Asset
• Usury or Riba
o Charging for the Use of
Money

6. Islamic Banking System
Asset Based

Money Asset

Service/Good is the Asset


7. It’s All About the
Process

8. The Process
Halal
Non Halal

9. Western Banking Process
$300,000
$330,000

10. Calculating Interest
$300,000 = Principle

10% = Interest

Mortgage Payment = Principle + Interest

Mortgage Payment = $300,000 + $30,000

Total Payment = $330,000


11. Islamic Banking Process
$325,000
$300,000

12. What are you Paying for?
For use of the asset you are being charged

rent
You are paying the fixed amount of

principle ($300,000)
You are also paying the fixed amount for

use of the asset, or rent ($25,000)
Total Payment = $325,000


13. The Process
Halal
Non Halal

14. Q&A