Diminishing Musharaka

Diminishing Musharaka is most commonly used for the financing of fixed and movable assets, long term projects, etc.

You and the Bank participate in joint ownership of a property, equipment or a commercial enterprise. The share of the Bank is divided into number of units. You purchase these units from bank one by one with periodic intervals, thereby increasing your share in the undivided property/asset gradually until you ultimately becomes sole owner of the property/asset. During the period of Musharakah bank charges rent for the use of that portion of asset which is owned by bank. The rent amount of the bank diminishes as its stake in the asset decreases after purchase of units.