Ijarah Muntahia Bittamleek

Ijarah Muntahia Bittamleek (IMB), meaning 'lease ending in ownership,' is a Shariah-compliant finance lease structure where an Islamic bank purchases an asset and leases it to a customer, with a promise (Wa'd) that ownership will be transferred at the end of the lease term — either through a gift (Hibah), a sale at a nominal price, or a sale at market value. Unlike a conventional finance lease, AAOIFI Shariah Standard No. 9 requires the ownership promise to remain separate from the Ijarah contract itself and be contingent on full rental payment — it must be a unilateral promise from the bank, not a binding bilateral contract embedded in the lease. The bank retains all risks of ownership during the lease period (major maintenance, damage not caused by the lessee, total loss), while the lessee bears operational maintenance. IMB is commonly used for home financing (as an alternative to conventional mortgages), commercial real estate financing, aircraft financing, and equipment leasing. Key advantages over Diminishing Musharakah include simpler accounting treatment, clearer title arrangements, and direct compatibility with AAOIFI FAS 8 (Ijarah accounting). IFSB-15 provides capital adequacy guidance for IMB exposures, treating them as collateralised financing. The IOF CORE_ISLAMIC_CONTRACTS rail provides a full IMB implementation including asset purchase, lease origination, rental scheduling, maintenance obligation tracking, transfer-of-ownership event processing, and AAOIFI FAS 8 compliant accounting entries.