APPLICATION OF AL-IJARAH THUMMA AL BAY

(AITAB) IN ISLAMIC FINANCIAL INSTITUTION

P R E PA R E D B Y:

• ALIMUL IMRAN BIN AMIR (62211120111)

• MUHAMMAD AZIZI BIN M AZDI KHAN (62213120373)
• NURUL AMANI BINTI BADRUL HISHAM (62211120040)
• N U R N A D Z I R A H B I N T I M A H A M A D FA U Z I ( 6 2 2 1 1 1 2 0 0 4 3 )
• WA N A I N A N A D I R A H B I N T I WA N A B D U L L A H ( 6 2 2 1 1 1 2 0 3 1 0 )
 INTRODUCTIO
N
• I s l a m i c b a n k i n g i s a b a n k i n g s y s t e m t h a t a d h e r e s t o I s l a m i c l a w,
o f t e n k n o w n a s S h a r i a h l a w.

• Conventional banking is fundamentally built on the debtor-

creditor relationship between depositors and the bank.

• In 1983, Malaysia's first Islamic bank was created. The origins of

Islamic banking in Malaysia may be traced back to 1963, when
t h e g o v e r n m e n t f o r m e d t h e Ta b u n g H a j i o r P i l g r i m s M a n a g e m e n t
and Fund Board.

• The expansion of Malaysia's Islamic banking system has resulted

in the adoption of Islamic financial innovations.
DEFINITI
• A l - I j a r a h T h u m m a a l - B a y ' ( A I TA B ) c a n b e d e f i n e d a s
ON a lease concluding with a sale.

O F A I TA B
• A I TA B i s a l e a s e w i t h t h e o p p o r t u n i t y f o r t h e l e s s e e
to purchase the asset.

• Ijarah is basically a contract between two parties.

• There are numerous definitions of Ijarah stated by

Muslim academics.
 THE ELEMENTS OF AL-IJARAH
THUMMA AL-BAY

• LESSOR • CONTRACT
(MUJIR) / • ASSET • R E N TA (AQAD)
LESSEE L OFFER AND
( M U S TA J I R ) A C C E P TA N C E
 1.The customer chooses a car and pays at
MODE OF OPERATE 10% deposit.

2. Customer get convenience AITAB

financing from the bank.

3. The bank buys the car by paying 90% of

the remaining purchases price.

4. The bank rent or lease the car to the

customer at a rental/tax price agreed with
the option to the customer to buy a car at
the end of the period rent.
DIFFERENCES ISLAMIC HIRE CONVENTIONAL
PURCHASE HIRE PURCHASE
BETWEEN
 AITAB covers all forms of  Conventional hire purchase
goods, both movable and loans are limited to
ISLAMIC HIRE immovable, including real consumer goods, vehicles
estate. and machinery.
PURCHASE AND
CONVENTIONAL  The customer is required to  The customer must sign a
sign two agreements namely standard agreement set
rental agreement (‘aqd out by HPA 1967.
HIRE PURCHASE ijarah) and sale and purchase
agreement (‘ aqd bay ’).

 Basic maintenance and  The tenant is responsible

structure of the goods is for all fees and
borne by the owner and the maintenance
tenant is responsible for
routine maintenance and
operation.
 E A R LY
PRINCIPLE PAY M E N T
SETTLEMENT

ADVANTAGES AITAB

L AT E
D O C U M E N TAT I O N PAY M E N T
SETTLEMENT
 DISADVANTAGES
AITAB

I N S TA L L M E N T COMMERCIAL
D O C U M E N TAT I O N
C A L C U L AT I O N S VIABILITY
 • Customers’ Attitude

• Lack of Experience among Bank Officers

CHALLENGES IN • Lack of Awareness and Cooperation among

the Dealers
THE OPERATION
OF AITAB • Documentation

• Competition in the Market

• Lack of Shari’ah Framework

 FUTURE PROSPECTS OF
AITAB FINANCING

• STRONG PUBLIC • LEGAL

A C C E P TA N C E PROTECTION

• MU’AMALAH
• COMPETITIVENESS
HIRE-PURCHASE
BILL
 CONCLUSION

• The field of Islamic banking and finance has progressed

b o t h c o n c e p t u a l l y a n d e x p e r i m e n t a l l y.

• E v e r y a c t i o n , h o w e v e r, m u s t b e b a s e d o n t h e f i v e
principles of Maqasid Shari’ah.

• Action is needed by all parties.

• Enhancing the current legal and regulatory framework.

THANK YOU

P R E PA R E D F O R :
DR. ISSOUFOU
CHAIBOU