Asset Financing is based under the principles of Diminishing Musharaka. Under Diminishing Musharaka, The Bank and the Customer jointly purchase the Asset (i.e. property/machinery etc.) and then the Bank leases its share to the customer. The Customer buys the equity share of the Bank gradually until the title to the equity is completely transferred to him.
There will be a mandatory holding period of 12 months, during which the customer cannot purchase units of the portion of the property owned by the Bank and will only service a monthly rental, hence, the ownership of the asset between Amãna Bank and the customer will remain unchanged.
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