Ijarah Thumma al-Bai is a hire-purchase arrangement. It consists of two stages: a leasing contract (Ijarah) followed by a separate sale (Bai) or gift (Hibah) of the asset to the lessee once all rental installments have been paid.

Rahn is an arrangement where a valuable asset is placed as security for a debt. If the debtor fails to repay, the creditor has the right to sell the pledged asset to recover the amount owed, ensuring the creditor's rights are protected.

AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions), based in Bahrain, is the leading international body that creates and issues Sharia, accounting, auditing, and governance standards for the global Islamic finance industry.

Hamish Jiddiyah is an amount paid by the client to the bank to demonstrate the 'seriousness' of their intent to purchase the asset. If the client backs out after the bank has purchased the asset, the bank may deduct its actual losses from this deposit.

Because Islamic banks cannot charge interest for late payments (as that would be Riba al-Nasi'ah), they often include a clause for a penalty that is donated to charity. This serves to discourage late payments without the bank making a profit from the client's default.

Usufruct refers to the legal right to use and derive profit or benefit from property that belongs to another. In Ijarah, the lessor owns the asset, but the lessee pays for the usufruct (the use of the asset) for a specific duration.

Tawarruq involves a client buying a commodity from a bank on a deferred payment basis (Murabaha) and then immediately selling it to a third party for spot cash. It is used to provide liquidity to clients, though it is viewed by some scholars as a legal stratagem (Hilah) to mimic a conventional loan.

Asset-backed Sukuk involve a true sale where ownership of the asset is transferred to the Sukuk holders, who bear the risk of the asset's performance. Asset-based Sukuk are more common and involve a promise by the issuer to pay back the principal, with the asset used mainly as a benchmark for the transaction.

Islamic finance is ethically driven. Investments must be 'Sharia-compliant,' meaning funds cannot be invested in businesses that produce alcohol, pork, tobacco, gambling services, or conventional financial services that deal in riba.

Wadiah refers to a deposit where the bank acts as a custodian for the customer's funds. In 'Wadiah Yad Dhamanah,' the bank guarantees the safety of the principal and can use the funds at its own risk, often providing a gift (Hibah) to the depositor as a token of appreciation.