Islamic finance in Europe (46)

Continuation

Ownership of the underlying asset remains with the bank.

This bears the risk associated with lending goods for the duration of the contract.

Some types of ijarah contract (e.g. the ijarah waiqtina contract):

-      include the right of final purchase

-      and allow for the transfer of ownership of the product.

Finally, there is also financing free of charge.

That is called as “qard hasan”.

This is intended for:

-      individuals

-      or companies

in financial difficulties.

This is merely a form of charity.

From the research paper of European Central Bank

(Authors: F.Mauro, P.Caristi, S.Couderc, A.D.Maria, L.Ho, B.K.Grewal, S.Masciantonio, S. Ongena and S.Zaher)