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    Advance Accounting

    Uploaded by

    Zarith Akhma
    This document compares hire purchase, leasing, ijarah, and al-ijarah thumma al-bay' (AITAB) contracts between conventional and Islamic banks. Hire purchase allows buyers to pay for an item in installments and receive ownership after full payment, while leasing transfers substantially all risks and rewards of an asset. Ijarah defines use and enjoyment of an asset's profits for a fee. AITAB is a two-contract structure involving both a lease and subsequent sale. The document finds that while terms differ, the operations of conventional and Islamic contracts are largely similar. It recommends that Islamic banks improve their services to gain more customers and follow Shariah guidelines like Al-Raj

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Advance Accounting

    Uploaded by

    Zarith Akhma
    162 views11 pages
    This document compares hire purchase, leasing, ijarah, and al-ijarah thumma al-bay' (AITAB) contracts between conventional and Islamic banks. Hire purchase allows buyers to pay for an item in installments and receive ownership after full payment, while leasing transfers substantially all risks and rewards of an asset. Ijarah defines use and enjoyment of an asset's profits for a fee. AITAB is a two-contract structure involving both a lease and subsequent sale. The document finds that while terms differ, the operations of conventional and Islamic contracts are largely similar. It recommends that Islamic banks improve their services to gain more customers and follow Shariah guidelines like Al-Raj

    Original Description:

    Comparison between hire purchase + leasing and Aitab + ijarah

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    This document compares hire purchase, leasing, ijarah, and al-ijarah thumma al-bay' (AITAB) contracts between conventional and Islamic banks. Hire purchase allows buyers to pay for an item in installments and receive ownership after full payment, while leasing transfers substantially all risks and rewards of an asset. Ijarah defines use and enjoyment of an asset's profits for a fee. AITAB is a two-contract structure involving both a lease and subsequent sale. The document finds that while terms differ, the operations of conventional and Islamic contracts are largely similar. It recommends that Islamic banks improve their services to gain more customers and follow Shariah guidelines like Al-Raj

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    162 views11 pages

    Advance Accounting

    Uploaded by

    Zarith Akhma
    This document compares hire purchase, leasing, ijarah, and al-ijarah thumma al-bay' (AITAB) contracts between conventional and Islamic banks. Hire purchase allows buyers to pay for an item in installments and receive ownership after full payment, while leasing transfers substantially all risks and rewards of an asset. Ijarah defines use and enjoyment of an asset's profits for a fee. AITAB is a two-contract structure involving both a lease and subsequent sale. The document finds that while terms differ, the operations of conventional and Islamic contracts are largely similar. It recommends that Islamic banks improve their services to gain more customers and follow Shariah guidelines like Al-Raj

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 11

    Zalikha binti Zanudin 1125746

    Haffiza Fitri Zulbahri 1119446



    Nur Zarith Akhma binti Tohirazaman 1114214

    Nor Farahi binti Saadon 1112012

    Sazatul Adillah binti Isa 1113338
    Comparison between
    Hire Purchase & Leasing with
    Ijarah & AITAB



    Hire purchase (HP ACT 1967) Leasing (MFRS 117)
    A system by which a buyer pays
    for a thing in regular installments
    while enjoying the use of it

    During the repayment period,
    ownership of the item does not pass
    to buyer. Upon the full payment of
    the loan, the title passes to the
    buyer.

    Finance lease
    A lease that transfer substantially all
    the risk and rewards incidental to
    ownership of an asset. Title to the
    asset may or not eventually be
    transferred.

    Operating lease
    A lease other than finance lease.
    The risk and reward associated with
    the asset are not transferred to the
    lessee. The legal and beneficial
    owner is the lessor

    Ijarah (IAS 17/MASB 10) Al- Ijarah Thumma
    Al-Bay/AITAB (HP Act 1967)
    A contract for defined intended
    usufruct liable to utilization and
    accessibility for a particular
    recompense

    Sale of usufruct
    Usufruct : the right to use and
    enjoy the profit and advantages
    of property belonging to another
    as long as it is no damage or
    altered in any way
    Hiring facility ending with sales of
    the asset

    That is, it is not a leasing contract
    with a condition to sell
    Rather, it is a contract of leasing
    with promise to sell
    Conventional Banks Islamic Banks
    Maybank Bank Pembangunan
    Malaysia Berhad
    CIMB Bank Berhad Kuwait Finance House
    Hong Leong Hong Leong Islamic Bank
    OCBC Bank Muamalat
    RHB Bank Berhad Bank Islam
    Product Bank
    2011
    (RM 000)
    %
    2012
    (RM000)
    %
    Hire
    Purchase
    Maybank 49,598,332 17.51 53,237,139 16.75
    Hong
    Leong
    17,214,483 20.49 17,373,330 19.18
    OCBC 624,920 1.47 653,132 1.38
    RHB 12,958,064 13.26 12,581,965 11.48
    CIMB 11,614,260 6.32 12,772,502 8.20
    CONVENTIONAL BANKS
    Product Bank
    2011
    (RM 000)
    %
    2012
    (RM000)
    %
    Lease
    Maybank 3,819 0.001 18,952 0.006
    Hong Leong 4,486 0.005 106,391 0.117
    OCBC 294 0.0008 44 0.00009
    RHB 116,243 0.12 75,650 0.07
    CIMB 109,868 0.06 73,811 0.047
    CONVENTIONAL BANKS
    Product Bank
    2011
    (RM 000)
    %
    2012
    (RM000)
    %
    Ijarah
    Muntahia
    Bittamleek
    BPMB 381,297 9.81 381,447 8.37
    Hong Leong
    Islamic
    2,265,296 41.34 3,860,709 31.15
    Bank
    Muamalat
    1,207,059 16.13 1,024,090 10.86
    Bank Islam 22,648 0.16 30,627 0.15
    Kuwait
    Finance
    House
    91,363 1.75 80,369 1.52
    ISLAMIC BANKS
    Product Bank
    2011
    (RM 000)
    %
    2012
    (RM000)
    %
    Ijarah
    BPMB 20,839 0.54 26,594 0.58
    Hong Leong
    Islamic
    4,436 0.081 10,634 0.086
    Bank
    Muamalat
    260,690 3.48 287,697 3.05
    Bank Islam 295,881 2.03 206,889 1.04
    Kuwait
    Finance
    House
    98,676 1.89 86,797 1.64
    ISLAMIC BANKS
    Comparison between Islamic and Conventional
    Bank
    Conventional Bank Islamic Bank
    Measurement/
    disclosure
    Leasing MFRS 117
    Hire Purchase HP Act 1967
    Ijarah IAS 17, MASB 10
    AITAB HP Act 1967
    Rate used Floating rate Fixed rate flexible rate
    Terms
    Interest rate,late payment interest,
    hiring charges
    Profit rate, mark up, late
    payment charges
    Contract One contract Two contracts
    Issues Raised Pertaining to Islamic and
    Conventional Banks
    Legitimacy
    AITAB ruled by HP Act 1967
    Finance lease is considered non-compliant
    with Shariah principle
    Term Used
    Different term but similar in operation
    CONCLUSION

    No significant difference

    Customers prefer to use the conventional banks products

    RECOMMENDATION

    Islamic banks need to be given some space to improve more on
    the service they offered

    They also can take Al-Rajhi Bank as a model and follow the
    Shariah guidelines and Islamic Framework implemented by Al-
    Rajhi bank

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