Risk sharing? What risk sharing?

An Ijarah wa Iqtina transaction typically involves the bank purchasing an asset at the request of the customer and leasing the asset to the same customer for a specified period. The lease is terminated at the end of the period whereby the bank transfers the ownership of the asset to the customer, or by the customer terminating the lease prematurely by paying a pre-agreed price to the bank. Although the bank has ownership of the asset during the tenure of the lease, they are not expected to assume any risks associated with ownership and are protected against any negative movements in the market value of the asset. Instead it is the customer (lessee) who has to bear the risks of ownership and the risks of fluctuation in asset value. The profits banks make equals the returns for providing financing and independent of the market value of the asset. Sounds very much like the conventional finance lease doesn’t it? My question is, where is the justice and equity in such a transaction? Why can’t banks treat ijarah transactions as operating leases? Unless negligence or breach on the part of the lessee is proven, why can’t the risks be borne by the rightful party, in this case the owners of the assets? The reason why Islamic financing uses finance lease model is because it has / wants to conform to the conventional banking norms, to adapt to the conventional accounting treatment for banks and financial institutions.

Like I said before, IBF is a young, developing science but the development must be done in the right way lest it grows into a farce.