HPSM-Hire Purchase Under Shirkatul Meelk (Ijara Muntahia Mittamleek)
is a special type of contract, used by Islamic Banks, which has been developed through practice. It is a combination of three contracts like Shirkat-al-Meelk, Ijarah and Sale.
Hire means
use of something for a short time in return for payment.
Hire Purchase is a system of buying someting by making regular payments for it over several months or years.
Shirkat-al-Meelk means share in ownership.
HPSM or IMB is one of the forms of Ijarah used in combination with Shirkat and Sale by the Islamic Banks as a mode of financing. This is actually a form of leasing contract which includes a promise by the Lessor to transfer the ownership in the leased property to the Lessee, either at the end of the term of the contract period or gradually step by step during the term of the contract on payment.
Contract of HPSM :
Islamic Banks practices three aspect of HPSM contract,
i) Purchase of a specified asset under joint ownership of the Bank and the Client.
ii) Lease out the asset by the Bank to the Client
iii) Transfer the ownership of the Bank share of the asset gradually to the client through sale contract.
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