Diminishing Musharaka by Mehmood Shafqaat

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customer 25 musharakah 20 joint 14 financing 13 ownership 13 agreement 12 documents 11 islamic 10 purchase 10 units 9 diminishing 8 required 8 asset 7 rent 7 applicant 6 legal 6 allowed 5 components 5 fixed 5 income 5 means 5 profit 5 purpose 5 shirkat 5 undertaking 5

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diminishing musharakah by mahmood shafqat senior joint director islamic banking department sbp at alhuda centre of islamic banking economic workshop sheraton hotel a karachi
the views expressed in this presentation are those of the author and do not necessarily represent state bank of pakistan

musharakah is basically a kind of partnership in which the partners join together with their contributions for the common objective of undertaking business and trade in accordance with the principles of shari ah
musharakah shirkah means sharing in the terminology of islamic fiqh

types of shirkat it has been divided into two kinds if shirkat ul milk it means joint ownership of two or more persons in a particular property
if shirkat ul aqd which means a partnership effected by a mutual contract

i house financing i car financing i plant and machinery financing i factory building financing i agriculture land financing i all other fixed assets
mode of fixed asset financing diminishing musharakah is commonly used for the purpose of financing of fixed assets by various islamic banks

joint bank ownership rent customer musharaka if the customer approaches the bank with the request for project machinery house financing if the bank enters into a musharakah joint ownership agreement with the customer and both of them pay their respective shares to the seller of the asset
if customer pays rent for the use of banks share in the property

joint bank ownership gradual transfer of ownership customer musharaka if the customer approaches the bank with the request for project machinery financing if the bank enters into a musharakah joint ownership agreement with the customer and both of them pay their respective shares to the seller of the asset
if customer pays rent for the use of banks share in the property if ownership of the asset is gradually transferred to the customer upon payment of asset price

if finally the customer becomes the sole owner of the property after having purchased all units from the bank along with the rentals thereon
units will be worked out by dividing bank s financed amount by number of months for which finance to be allowed

a c all muslim jurists agree on the permissibility of the financier leasing his share in property to client and charging him rent ie the permissibility of leasing one s share to his partner
shariah principles a c to create joint ownership in property is called shirkat ul milk and is expressly allowed by all schools of islamic jurisprudence

a c instead of making the transactions a pre condition for one another there can be one sided promises from one party to another
shariah principles a c promise of client to purchase units of share of financier is also allowed

diminishing musharakah agreement a islamic housing finance agreement purpose this is the main agreement that establishes bank s share in the musharakah property
monthly payment agreement rent agreement purpose this agreement is signed after main musharakah agreement

undertaking to sell musharakah units purpose this is an undertaking by the bank to sell bank s musharakah units from time to time
components normal sale price additional unit purchase price

tenor designation salary a c last months bank statement a c copy of management accounts if applicable a c bank statement of business in case of co applicant the income related documents will also be required for the co applicant as well
required documents income information a c copy of recent pay slip employer letter a c employer certificate for salaried employees incl

such security may be required if the standing of the borrower does not meet the credit underwriting requirements of bank
a c any additional security as may be determined by bank

for salaried individuals bank will verify the income with customer s employer step legal opinion a legal opinion will be obtained on the property documents step property valuation appointed valuation agency will evaluate the property to determine its market value
step by step guide step income estimation for businessman self employed individuals bank s external consultant may determine customer s monthly income

step by step guide step credit approval sanction letter after customer have fulfilled all credit requirement satisfactorily bank will give a conditional sanction letter step account opening customer will be required to open an account in bank by submitting a filled account opening form step signing of house finance agreement customer sign islamic house finance agreement and other legal documents
for building renovation replacement of house original property documents will be handed over to the bank at this stage

original property documents will be handed over to the lawyer who after verification of the document will handover the pay order to the seller and will complete the legal formalities on bank s behalf
step by step guide step transfer of property disbursement in home buyer cases bank s sales officer authorized lawyer will accompany customer seller of the property to the registrar office for property transfer

key faqs what is the difference between the profit bank charges and the interest charged in conventional mortgages in conventional mortgages the interest charged is a mark up on the money lent
the profit charged by bank is the utilization payment for the consumer s use of bank s share throughout the life of the contract

thank you ph fax email mahmood
pk http www dot sbp

Please note, This is an auto generated summary based on sentances position in the document and other factors

DOCUMENT WORD ANALYSIS

Main Category

AlHuda Material\islamic banking

KeyWords

contract price sale asset financing lease client purchase ijarah payment profit musharakah lessee amount commodity housing agreement contracts ownership project

DOCUMENT REFERENCES

Number of Pages

32

Published Date

2016-09-17 00:25:21

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Diminishing Musharaka by Mehmood Shafqaat

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