Definition for : Ijara

In Islamic finance, ijara is a contract whereby a financial institution buys an asset and Leases it back to a corporate. The Ijara can take the form of a Ijara-wa-Iqtina (Lease with acquisition Option). A third form of Ijara is Ijara with decreasing Musharaka that can be used to acquire a real estate asset. The Share of the financial institution decreases as the annual payments include repayment of capital. At the end of such contract, the ownership is transfered.

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