IRP 92 – Islamic Financing Using the Format of a Sale with the Exception of the Usufruct: An Applied Study of the Products of American Finance House LARIBA

The research comprises an introduction and six sections followed by a conclusion containing the most important results. The introduction provides a definition of Islamic financing using the format of a sale with the exception of the usufruct. This term refers to the sale of an asset (the title and its usufruct) with an exclusion of the usufruct for a stipulated period (for example, the financing period) and then the lease of the usufruct to the customer for the excluded period. LARIBA applies the Declining Participation in Usufruct Model to this format. The Declining Participation in Usufruct Model resembles the model of a partnership ending in transfer of ownership from one angle: the ownership stake of the financing institution continually diminishes in proportion to the increasing ownership stake of the customer. They differ, however, in the subject of the partnership. A partnership ending in transfer of ownership is based on joint ownership of the entire asset, comprising both the title and the usufruct, while Declining Participation in Usufruct exclusively involves joint ownership of the usufruct.