Islamic finance as practiced today is a new phenomenon that is very interesting to look at not because it is related to the so-called growth rate that is so impressive according to many reports of late. True that to a certain extent, the figure normally quoted to support this claim of impressive growth is there to be appreciated but the basic question to ask is whether such an achievement is truly an achievement worthy of celebration.
Saturday, October 5, 2013
Saturday, January 19, 2013
THE EGYPTIAN DEBATE ON SUKUK LAW
THE EGYPTIAN
DEBATE ON SUKUK LAW
The current
Egyptian debate about the sukuk draft law that had been proposed by the
government and tabled in the People Assembly and passed but rejected by some shows
clearly that sukuk is such a topical topic in a country where Islamic finance
was tested many decades ago even before many other countries started their Islamic
finance movement. During the eighties of the last century, many would remember
the controversy surrounding the so-called Islamic investment schemes that were
mushrooming in the country including the famous case of al-Rayyan Investment Scheme. The difference is that the government of
the day at that time had a very different attitude toward Islamic finance and
about anything Islamic generally.
Friday, October 26, 2012
SUKUK BACKED BY MIXED ASSET
SUKUK BACKED BY MIXED ASSET
Sukuk literally means “pieces of paper” or “documents that acknowledge something.” In a commercial sense it refers to instruments used in Islamic finance to allow one party to raise capital or funds in the capital market with the issuance of sukuk papers that list the rights and obligations of all parties involved in a transaction. Even though sukuk are sometimes referred to as Islamic bonds, they are not bonds in the conventional sense as holders of the former are not supposed to expect a fixed rate of returns from their purchase of these securities, as is the case with conventional bond holders. In the case of sukuk, what is important is that holders of the certificates must own the underlying assets to justify returns which are not fixed but are tied to actual returns/incomes generated by the assets owned. Hence, in the case of sukuk musharakah, for example, investors are sold portions of assets to be used in business. Returns to holders are in fact income or profit earned from the use of the assets in a manner specified in the sukuk contracts.
Sukuk literally means “pieces of paper” or “documents that acknowledge something.” In a commercial sense it refers to instruments used in Islamic finance to allow one party to raise capital or funds in the capital market with the issuance of sukuk papers that list the rights and obligations of all parties involved in a transaction. Even though sukuk are sometimes referred to as Islamic bonds, they are not bonds in the conventional sense as holders of the former are not supposed to expect a fixed rate of returns from their purchase of these securities, as is the case with conventional bond holders. In the case of sukuk, what is important is that holders of the certificates must own the underlying assets to justify returns which are not fixed but are tied to actual returns/incomes generated by the assets owned. Hence, in the case of sukuk musharakah, for example, investors are sold portions of assets to be used in business. Returns to holders are in fact income or profit earned from the use of the assets in a manner specified in the sukuk contracts.
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