The
difference between an interest based financing and a real/valid lease does not lie
in the amount to be paid to the lessor. The basic difference is that in the
case of lslamic Ijarah, the ownership and title in the asset/property rest
with the lessor who assumes the full risk of the corpus of the leased asset. If
the asset is destroyed during the lease period, the lessor will suffer the
loss. Similarly, if the leased asset looses its usufruct without any misuse or
negligence on the part of the lessee, the lessor cannot claim the rent, while
in the case of an interest-based financing, the financier is entitled to
receive interest, even if the debtor did not at all benefit from the money
borrowed. So far as this basic difference is maintained, (i.e. the lessor
assumes the risk of the leased asset) the transaction cannot be categorized as
an interest-bearing transaction, even though the amount of rent claimed from
the lessee may be equal to the rate of interest. Therefore, the use of the rate
of interest merely as a benchmark does not render the Ijara contract invalid as
an interest-based transaction. It is, however, advisable at all times to avoid
using interest even as a benchmark so that an Islamic transaction is totally
distinguished from an un-Islamic one, having no resemblance of interest
whatsoever.
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