1. critically analyze the following sentences from Ijarah Sukuk point of view

1. Showing results for Structure of Home Finance based on Ijarah Muntahia Bittamleek
2. Penalty for Nonperformance of the contract.

2. Evaluate the benefits of Ijarah and economic role ofIjarah for Leasing Operation the countries.

3. Suppose a builder/contractor C has announced a scheme for the construction and sale of apartments costing Rs. 7 million each. (He demands cash and has no financial relationship with the bank.).Client A decides to have an apartment; he has Rs. 2 million and needs financing from bank B of Rs. 5 million for ten years.Calculate the amount of finance using Istisna and Dimminishing Musharakha.

4. Appraise the Housing finance though Dimminishing Musharakha as a mode of finance.

Hypothetical Case Study on Housing Finance Through Diminishing Musharakah (Partnership by Ownership)

Construction of a House on a Customers Land

Diminishing Musharakah can be easily used for the purpose of financing fixed assets by

Islamic banks. It includes house financing, auto financing, plant and machinery financing,

factory/building financing and all other fixed asset financing. In the case of housing finance,for example, a joint ownership is created for the purpose of Diminishing Musharakah. The financier partner gives his undivided share on lease to the partner using the house. The client gives rent on the part of the financier and periodically purchases the units of the partners ownership.

Cost of house: Drs or Ryls 800000 Mm

Bank financing: 80%

Tenure: 10 years

Rental (return rate equivalent to) : 4% p.a. (of investment)

Purpose: home purchase from the market

Key structure

Monthly payment consists of unit purchase and rent components. Unit purchase will

remain constant over the entire tenure. Rent is calculated based on the number of

units outstanding. The rent component will decrease every month with the purchase

of units.

(Construction of a house on a plot of land already owned by the client,

renovation/additions to a house owned by him or a balance transfer facility (BTF) for

the payment of an interest-based mortgage loan on a clients house are subject to a

different procedure, as discussed in the previous Box.)

Banks share: Ryls. 6400 000; full payment is made in one tranche

Clients share: Ryls. 1600 000

No. of banks units (equal to number of months): 120.

1. Calculate price per unit and rent per unit .
2. Show the monthly payment for 10 months .