Islamic and Conventional Leasing: Understanding Financial Instruments

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In an Ijara contract, what is transferred?

Ownership of the corpus of the asset
Usufuct of a particular asset (correct)
Liabilities related to the asset
Both ownership and usufuct of the asset

How does Ijara differ from Bai'?

Ijara has no time limit, while Bai' is always time-bound.
In Ijara, both ownership and usufruct are traded; in Bai', only ownership is transferred.
In Ijara, ownership of the asset is transferred; in Bai', only usufruct is traded. (correct)
Ijara is always indefinite, while sale implies a definite transfer of ownership.

What determines the rent in an Ijara contract?

Rent is fixed and cannot be reviewed.
Rent is always tied to the inflation rate.
Rent is determined based on the aggregate cost incurred in the purchase, construction, or installation of the asset by the lessor. (correct)
Lessors can increase rent unilaterally.

What happens if a leased asset becomes unusable?

The contract is terminated. (D) Signup and view all the answers

What liabilities does a lessee bear in an Ijara contract?

Liabilities emerging from ownership only. (D) Signup and view all the answers

How does an Ijara contract handle non-payment of due rent?

Accrual of rental continues even if the lessee stops using the asset without consent. (B) Signup and view all the answers

What should Islamic leasing comply with?

Conditions of Islamic leasing (A) Signup and view all the answers

When should rent be charged in an Ijara contract?

After delivery of the leased asset to the lessee (D) Signup and view all the answers

What remains in the ownership of the lessor in an Ijara contract?

The corpus of the asset (B) Signup and view all the answers

How does Ijara differ from Bai' regarding ownership transfer?

No ownership transfer in Ijara (A) Signup and view all the answers

Who bears liabilities related to ownership in an Ijara contract?

Lessor (B) Signup and view all the answers

What could be used as a benchmark for setting rent in Ijara?

Inflation rate (B) Signup and view all the answers

When can a donation or penalty payable to charity be made under Shariah Scholars' guidance?

In place of rent payment (B) Signup and view all the answers

What happens if an Ijara contract lessee stops using the asset without lessor consent?

Rental continues to accrue (B) Signup and view all the answers

What is subjected to a ceiling or limit according to scholars in an Ijara contract?

Rent payable by lessee (A) Signup and view all the answers

'Lease as a mode of financing' in Islamic leasing should not be based on what?

'Interest-based loan' (A) Signup and view all the answers

'Lease as a mode of financing' differs from Murabaha in terms of what?

'Future date commencement' (A) Signup and view all the answers

What sets apart rental payment in an Ijara contract from sale price payment?

Rent charged only after asset delivery. (A) Signup and view all the answers