Lease is the employment of money in operations other than sale and purchase. This mode of financing aims at sale of the benefit of an asset not the asset itself.
BBL offers two modes of Lease (Ijara):
1. Operation Lease/Ijara Tashghiliah
BBL uses the Operation lease for the benefits as an instrument of financing by purchasing possessions and fixed assets and putting them at the disposal of Clients to utilize in return of rental payments to be agreed upon; after which, the asset return to the bank. This mode can be:
i. Specific or determined lease of real property
ii. Lease of benefit determined by specifications agreed upon to be on liability such as a car or a ship i.e. not particular but precisely described.
2. Lease Purchase/Ijara muntahia Bittamleek
Is another mode of financing offered by BBL to its clientele. According to this mode, asset subject of lease purchase contract is not maintained by BBL but purchased as a response to an emphatic request from one of the customers to own the asset through Lease that ends with possession.
BBL mostly calculates the total rental on the basis of the cost of asset plus a profit margin then the rental is installed in periods to be agreed upon. At the end of the lease period, BBL transfers possession of the asset to the lessee (client) through either of the following two ways:
i. A lease contract with a promise to grant the asset to the lessee after paying all the rental installments whereby the grant must be in a separate contact.
ii. A lease contract with a promise to sell asset to the lessee in exchange of a nominal or actual price at the end of the lease period after paying all the rental installments agreed upon.