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Bai Murabaha Muajjal  |  Hire-Purchase Under Shirkatul Melk (HPSM)  |  Musharaka
Hire-Purchase under Shirkatul Melk (HPSM)
The special mode of Hire-Purchase under Shirkatul Melk evolves from two terms / concepts. As indicated from the nomenclature, these two terms are: (i) Hire-Purchase and (ii) Shirkat (Partnership).

Hire-Purchase, a very common term or contract, denotes an arrangement involving other two common terms: (a) Hire and (b) Purchase. Such a contract also gets a common indication that this arrangement involves these two things simultaneously. Here a party at a point of time gets a thing on Hire and at another point of time, s/he owns the same by way of (gradual) Purchase. It is, therefore, hire first and purchase next. Many conventional organizations including Banks and Financial Institutions practise such a business / contract since long, which is evident from many concerned academic text books. Under such an arrangement, an initial hirer (user, not owner) of an asset culminates/attains ownership at the end of the deal.

Shirkat means partnership. Melk means ownership. So "Shirkatul Melk" means share in ownership i.e. when more than one party owns a thing, it evolves Shirkatul Melk. It is a concept of co-ownership having a trait of diminishing partnership.

Under the HPSM mode both the Bank and the Client supply equity in agreed proportion to procure an asset like land, building, machinery, and transports or the like; purchase the asset with that equity money, own the same jointly; share the benefit as per agreement and bear the loss in proportion to their respective equity. The share, part or portion of the asset owned by the Bank is hired out to the Client partner for a fixed rent per unit of time for a fixed period. Lastly, the Bank sells and transfers the ownership of its share / part / portion to the Client against payment of price apportioned for that part usually made gradually / part by part.
Sectors to use the mode of finance
HPSM is the mode of finance which is used to buy any kind of asset. HPSM is used I the following sectors of financing
Term Finance: To purchase any commercial asset like machinery, vehicles, building etc.
HPSM Post Import: To ensure post-import facility for capital machinery
House Finance: To purchase of new or reconditioned flat, house, construction of new house, extension of existing house etc.
Auto Finance: To purchase personal new and reconditioned vehicles.
Any kind of retail and SME finance
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