3.The bank would finance the purchase jointly with the buyer in the form
of a joint ownership (Musharaka):
a.The RF bank would sell its entire share back to the buyer immediately
and record the property (the house or the car) in the buyer’s name.
b.The RF bank would exercise and perfect a lien that makes the RF
bank a lien holder, and get a contractual promise from the client to
pay back the bank share over a certain period of time (the term of the
buy back) by the customer. In this step the buyer would be the owner
of the title (milk ul raqabah).
c.The RF finance company or the RF bank would participate in and
share in the benefits of using the property (haq al manfa’aa)—in the
case of a car, it is the lease rate of the car; in the case of a house, it is
the lease rate of the house—over the years in the proportion of its
changing implied ownership (the RF bank’s implied ownership—
through the lien—and hence the share in the usufruct declines as the
buyer progressively pays back his owed part of the purchase price).
d.The bank or the finance company can use the word interest to satisfy
the laws of the land to describe the payments share of the rental of
the property. However, the opposite (taking interest and calling it
profit) is not allowed.The wordlienhas been mistranslated to Arabic asrahn, which means
pawn. There is a world of difference between the two in legal definition. In
general, in case ofrahn, or pawning the property, the property itself and its
use are both arrested and placed in the custody of the pawn holder. That
means that the right to use the property (haq al manfa’aa) is confiscated
until the riba loan is paid back. If it is not paid, then the rahn-holder would
take over the property (milk ul raqabah) without legal action, because it is
in the possession of the rahn-holder.
DEFINITION OF PAWN
17Verb: To deliver personal property to another in pledge or as security
for a debt or sum borrowed.
Noun: A bailment of goods to a creditor as security for some debt
engagement; a pledge; a deposit of personal property made to a pawn-
broker as security for a loan. That sort of bailment when goods or
chattels are delivered to another as security to him/her for money bor-
rowed of him/her by the bailor. Also, the specific chattel delivered to
the creditor as a pledge.RF Banking Model for the 21st Century 261