Sukuk is an Islamic Financial Product. It is an arabic plural word. Singular: Sakk-صك, Plural: Sukuk-صكوك The meaning of Sakk is 'legal instrument, deed, check'. It is commonly refers to the Islamic equivalent of bonds. Islam does not allow fixed income, interest bearing bonds. But sukuk is allowed in Islamic Shariah. Conventional bond is a promise to repay a loan.
According to IFSB , Sukuk is defined as certificates that represents the holder's proportionate ownership in an undivided part of the underlying assets where the holder assumes all rights and obligations to such assets.
Types of Sukuk:
Sukuk Murabaha: It is a partial ownership in a debt.
Sukuk Al Ijara: A partial ownership in asset.
Sukuk Al Istisna: A partial ownership in project.
Sukuk Al Musharaka: A partial ownership in business.
Sukuk Al Istithmar: A partial ownership in investment.
Sukuk al Mujarah, Mushakath, Mugarasa
Characterstics of Sukuk:
1. Sukuk holders are not only investors but also owner of the underlying assets.
2. It is an investment certificate that ensure ownership.
3. Sukuk has a definite time limit/maturity.
4. It is a shariah compliant , transferable and certificate which can convert into cash.
5. Sukuk obligator must have immovable properties on the balance sheet.
Parties of Sukuk:
1. Obligator
2. Special Purpose Vehicle (SPV)
3. Sukuk holder
Sukuk Operation procedure:
Step-1: SPV issues certificate, Sukuk holder pays price
Step-2:Obligator transfer title of Assets, SPV pay asset price
Step-3: Obligator and SPV have lease agreement, Obligator pays rent
Step-4: SPV pays periodic profit to Sukuk holder
Step-5: Obligator buy back assets at maturity from SPV
Step-6: SPV reimburse Sukuk holder at maturity
Showing posts with label Islamic Financial Products. Show all posts
Showing posts with label Islamic Financial Products. Show all posts
What is Takaful?
Takaful:
The word Takaful is an arabic word which means 'mutual guarantee'. It is a type of Islamic insurance, where members contribute money into a pooling
system in order to guarantee each other against loss or damage. It goes against the riba (interest), al-maisir (gambling), and al-gharar (uncertainty) principles, that are prohibited in Islamic Sharia.
Reference from Quran:
Help one another in al-Birr and in al-Taqwa (virtue, righteousness and piety), but do not help one another in sin and transgression. (Surah Al-Maidah, Verse 2)
Principles of Takaful:
The word Takaful is an arabic word which means 'mutual guarantee'. It is a type of Islamic insurance, where members contribute money into a pooling
system in order to guarantee each other against loss or damage. It goes against the riba (interest), al-maisir (gambling), and al-gharar (uncertainty) principles, that are prohibited in Islamic Sharia.
Reference from Quran:
Help one another in al-Birr and in al-Taqwa (virtue, righteousness and piety), but do not help one another in sin and transgression. (Surah Al-Maidah, Verse 2)
Principles of Takaful:
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