Ijara as a tool of Islamic finance

The term Ijara means putting on rent and the Sharia process is known as Ijara-wa-Iqtina which means rent to own a property. Islamic banking is characterized by a banking activity that is in accordance to the Shariah law which is the main Islamic law. The Islamic law prevents the acceptance of interest rates or fees for loans of money or any other kind of monetary transaction. If you are knee deep in debt, you can invest your money in Ijara loans and utilize the money in paying debt help services. Taking some step towards your debt helps you feel secured in terms of your finances. Read on to know more about investing in Ijara loans.

Objective of investing in Ijara loans

The objective of investing in the Ijara loan funds is to receive attractive monthly returns on your investments. Participating in the WRIIF that invests carefully in selective Ijara funds will help you gain maximum returns on your investments. This kind of transaction satisfies the requirements of the Islamic finance law which is also approved and allowed by the Shariah board. The Ijara fund typically allocates its assets in buying equipments or portfolios of equipment which will again be leased to different lessees. The portfolio of the equipments will have a diversified range of leases and types of equipment. The entire portfolio needs to be invested according to the principles prevailing in the Islamic finance law or the Shariah.

Ijara as an Islamic investment

Ijara is a very famous kind of mark up structure in the Islamic finance. It is a form of leasing where the bank buys a capital property and leases it to end-users under installment plans. The installments consist of rental-for-use and partly payments. The customer or the investor will select the asset that has to be financed and the bank buys it from the supplier and leases it to the customer for a definite period. You can also refinance the assets that are owned by the client in a sale. The bank has to be paid rent as he is the owner of the assets. The bank must exercise all the rights and obligations of the
lessor such as maintenance, renovations and insurance.

Thus, the Islamic bankers have decided to avoid any kind of business risk by facilitating the investment in the Murabaha and Ijara. The most essential feature of such investment is the presence of an authentic identifiable trade transaction. With such growing popularity of investment banking, you can well earn huge profits by trying your luck in Ijara investment. Utilize the proceeds in paying off your debts. Taking a step towards your debt helps you feel confident about your finances.