You are on page 1of 11

Zalikha binti Zanudin 1125746

Haffiza Fitri Zulbahri 1119446

Nur Zarith Akhma binti Tohirazaman 1114214

Nor Farahi binti Sa’adon 1112012

Sazatul Adillah binti Isa 1113338
Comparison between
Hire Purchase & Leasing with
Ijarah & AITAB



Hire purchase (HP ACT 1967) Leasing (MFRS 117)
A system by which a buyer pays
for a thing in regular installments
while enjoying the use of it

During the repayment period,
ownership of the item does not pass
to buyer. Upon the full payment of
the loan, the title passes to the
buyer.

Finance lease
A lease that transfer substantially all
the risk and rewards incidental to
ownership of an asset. Title to the
asset may or not eventually be
transferred.

Operating lease
A lease other than finance lease.
The risk and reward associated with
the asset are not transferred to the
lessee. The legal and beneficial
owner is the lessor

Ijarah (IAS 17/MASB 10) Al- Ijarah Thumma
Al-Bay’/AITAB (HP Act 1967)
A contract for defined intended
usufruct liable to utilization and
accessibility for a particular
recompense

Sale of usufruct
Usufruct : the right to use and
enjoy the profit and advantages
of property belonging to another
as long as it is no damage or
altered in any way
Hiring facility ending with sales of
the asset

That is, it is not a leasing contract
with a condition to sell
Rather, it is a contract of leasing
with promise to sell
Conventional Banks Islamic Banks
Maybank Bank Pembangunan
Malaysia Berhad
CIMB Bank Berhad Kuwait Finance House
Hong Leong Hong Leong Islamic Bank
OCBC Bank Muamalat
RHB Bank Berhad Bank Islam
Product Bank
2011
(RM ‘000)
%
2012
(RM’000)
%
Hire
Purchase
Maybank 49,598,332 17.51 53,237,139 16.75
Hong
Leong
17,214,483 20.49 17,373,330 19.18
OCBC 624,920 1.47 653,132 1.38
RHB 12,958,064 13.26 12,581,965 11.48
CIMB 11,614,260 6.32 12,772,502 8.20
CONVENTIONAL BANKS
Product Bank
2011
(RM ‘000)
%
2012
(RM’000)
%
Lease
Maybank 3,819 0.001 18,952 0.006
Hong Leong 4,486 0.005 106,391 0.117
OCBC 294 0.0008 44 0.00009
RHB 116,243 0.12 75,650 0.07
CIMB 109,868 0.06 73,811 0.047
CONVENTIONAL BANKS
Product Bank
2011
(RM ‘000)
%
2012
(RM’000)
%
Ijarah
Muntahia
Bittamleek
BPMB 381,297 9.81 381,447 8.37
Hong Leong
Islamic
2,265,296 41.34 3,860,709 31.15
Bank
Muamalat
1,207,059 16.13 1,024,090 10.86
Bank Islam 22,648 0.16 30,627 0.15
Kuwait
Finance
House
91,363 1.75 80,369 1.52
ISLAMIC BANKS
Product Bank
2011
(RM ‘000)
%
2012
(RM’000)
%
Ijarah
BPMB 20,839 0.54 26,594 0.58
Hong Leong
Islamic
4,436 0.081 10,634 0.086
Bank
Muamalat
260,690 3.48 287,697 3.05
Bank Islam 295,881 2.03 206,889 1.04
Kuwait
Finance
House
98,676 1.89 86,797 1.64
ISLAMIC BANKS
Comparison between Islamic and Conventional
Bank
Conventional Bank Islamic Bank
Measurement/
disclosure
Leasing – MFRS 117
Hire Purchase – HP Act 1967
Ijarah – IAS 17, MASB 10
AITAB – HP Act 1967
Rate used Floating rate Fixed rate flexible rate
Terms
Interest rate,late payment interest,
hiring charges
Profit rate, mark up, late
payment charges
Contract One contract Two contracts
Issues Raised Pertaining to Islamic and
Conventional Banks
 Legitimacy
 AITAB ruled by HP Act 1967
 Finance lease is considered non-compliant
with Shariah principle
 Term Used
 Different term but similar in operation
CONCLUSION

No significant difference

Customers prefer to use the conventional banks’ products

RECOMMENDATION

Islamic banks need to be given some space to improve more on
the service they offered

 They also can take Al-Rajhi Bank as a model and follow the
Shariah guidelines and Islamic Framework implemented by Al-
Rajhi bank