DANA GAS: WHERE CREDITORS ARE HIDING IN THE SUKUK?

DANA GAS: WHERE CREDITORS ARE HIDING IN THE SUKUK?

The latest issue surrounding Dana Gas Sukuk clearly shows that the market is still struggling to understand the true nature of sukuk. In reports published of late, many still talk about creditors taking steps to protect their interest related to payment of the so called dividend or profit as mentioned or provided for in the sukuk documents.

If the word “creditors” is to be understood conventionally referring to someone who has lent a certain sum of money, who for sure is entitled for a repayment at a certain future agreed date, then obviously the use of such word in the context of sukuk is totally unacceptable. The reason being true Shariah compliant sukuk are basically not debt instruments like conventional bonds where sums of money are borrowed or lent.

"WAAD" AND ISLAMIC CONTRACTUAL FRAMEWORK?

‘WAAD’ OR PROMISE: WHY IT IS INCONSISTENT WITH ISLAMIC CONTRACTUAL FRAMEWORK

In one of the previous posts, we raised up an issue pertaining to the use “waad” or promise in Islamic finance and how it seems that this concept has been widely employed to achieve some objectives aimed at helping one party but denying justice to the other side in a transaction. For a start, Islamic law right from the outset has recognized a distinction between a promise and a contract (‘aqd) where a contract has been viewed more important than a promise at least in the context of external binding effect. However even in the case of contracts, Islamic law does look at the nature of the contracts concerned when it comes to the question of their external binding effect  that will define whether the court will enforce the ensuing obligations or not.

CHARGING FEES FOR FINANCIAL GUARANTEE: THE BASIC ISSUE

GUARANTEE FEES AND ISLAMIC FINANCE: WHAT IS THE BASIC ISSUE??

Islam prohibits charging of interest for money lending if such is contractually made compulsory on a borrower and as such has made it very clear that payment and receipt of interest made compulsory based on contracts between the two parties is prohibited. However the borrower is allowed out of his own accord without compulsion to pay more than what he had borrowed from the lender as a token of gratitude for the kindness rendered. Money lending must always be treated as a benevolent contract in Islam that its shall carry no interest charges.