---
title: "Islamic Finance in a Minute, episode 3: Ijarah"
type: podcast episode 3
published: 2026-10-06T02:00:00.000Z
url: https://islamicopenfinance.com/podcasts/term-ijarah
audio: https://islamicopenfinance.com/podcasts/audio/term-ijarah.mp3
voices: synthetic (AI-generated speech)
---

# Islamic Finance in a Minute, episode 3: Ijarah

> A lease: the lessor owns the asset and sells its use for an agreed rent over an agreed period. (Lease, agency and service contracts)

## Transcript

**Amina:** Hi! Islamic Finance in a Minute, episode 3. Today's term: Ijarah. Ijarah is the Islamic lease. What makes it Islamic?

**Yusuf:** The bank owns the asset and rents out its use. Your payments are rent for using something that belongs to the bank, not interest on money you borrowed.

**Amina:** Who's responsible if something major goes wrong with the asset?

**Yusuf:** As owner, the lessor carries the risks of ownership. Bank Negara Malaysia's rules put the costs that come from owning, like maintenance and takaful cover, on the lessor, though the parties can agree how those costs are handled.

**Amina:** And if the asset is destroyed?

**Yusuf:** Then the lessee cannot use it, and rent for the lost use generally stops. That is the practical test that ownership is real. Your system should model the asset, its owner and its condition, not just a payment schedule.

**Amina:** The full definition and related terms are in the IslamicOpenFinance™ glossary. Our voices were made with AI; see you tomorrow!