Islamic Diminishing Musharakah

Diminishing Musharakah is a form of ‘Musharakah’ (Partnership) in which the ownership of the asset is
divided into units. Pegasus will then leases its share of asset (units) to the customer against rental
payments. In parallel, the customer periodically purchases the units under the ownership of Pegasus.


For financing consumer durables like houses, cars or computers, conventional banks use what
are called the equal monthly installment (EMI). EMI is the fixed payment a borrower
makes to a lender to pay off both interest and principal each month so that over a specified
number of years, the loan is cleared off in full. Islamic banks have followed suit using EMI on
diminishing musharakah partnership basis. The defining character of this model is increasing
amortization of capital through a customer buy back provision in the agreement.

You can calculate your EMI here