In: Finance
How to implement ijarah contract in agriculture financing (500 words)
Ijarah contract is a contract in which the owner of an asset transfers its legal right to use to another person for an agreed period for an agreed consideration. It is suitable for long term financing and has flexibility to change the rental as per rules of Ijarah.
One of the benefits of Ijara loans for the agricultural sector is that the farmer or the entrepreneur can lease the machinery instead of purchasing it for a fixed rental payment in return at pre-determined intervals of time. The farmer can enjoy the right of usage right after making the first payment. Thus he can use the asset for productive purposes without bearing the risks and responsibilities of ownership.
Procedure for implementation of Ijarah contract