Ijara Mawsufha Fi Al Dhimmah is used to finance large project finance transactions.
Bank advances payments to the Agent
Customer pays lease rentals
Ownership of the Project assets is passed to the Customer
Ijara Mawsufha Fi Al Dhimmah is used to finance large project finance transactions. Customer requiring finance to develop a specific project is appointed as Bank’s Agent to undertake the construction of the project and simultaneously enters into a forward lease agreement to lease the assets developed by the project, once the construction is completed.
During the construction period, Bank advances payments to the Agent to make payments to the contractor.
On completion of construction, the ownership of the project assets passes to Bank basis the forward lease agreement and the lease commences. During the lease period, the Customer pays lease rentals. At the expiry of the lease agreement, the ownership of the Project assets is passed to the Customer.