Challenges to Making Sukuk Sharia Compalience by Dr. M. Anas

Top 20 FREQUENT WORDS

lease 17 financial 14 shariah 12 sukuk 11 lessor 10 islamic 9 lessee 9 operating 8 fiqh 7 asset 6 assets 6 leases 6 international 5 negotiable 5 standards 5 consequences 4 important 4 leased 4 ownership 4 price 4

DOCUMENT KEY POINTS

anas zarka the international investor company kuwait views expressed are personal presented to international islamic financial markets conference bahrain may
challenges in making sukuk shariah compliant by doctor m

to be shariah comp must be based wholly or mainly on ow real ie tangible assets
negotiability means transferability at any mutually agree a c sukuk are financial instruments that are income generating

distinguishing a mode of finance from instrument a c sale for a deferred price bay bithaman mu islamic mode of financing that is income gen includes the seller s profit but cannot be use create a financial instrument

financial clai a c shariah rules in the holy quran and su prophet peace be on him and muslim j throughout history clearly differentiate money and credit on the one hand and r tangible assets and services on the other a c modern economic theorizing has awake important distinction
nobel laureate j stiglitz deems this differentiation a cor correct understanding of monetary econ policy

most sukuk are structured on t leased assets a c but all leases are not born equal a c modern finance recognizes the differen between financial and operating leases the tax man and the international acco standards
a c the rulings of international fiqh acade oic and the standards of aaoifi in b all meant to apply to shariah compliant leases

it is usu as a sale by the lessor and as a purchase by thus a financial lease has similar characteristi loan and a conditional sales contract
a c in between these two polar cases are many var leases that may be classified differently by acc standards national commercial codes tax aut lately by fiqh academies

operating leases in conventional and in islamic fiqh a c an operating lease ol usually finances equ buildings for less than their useful life and at the lease term the lessee can return the equipm lessor without further obligation
accordingly the asset is not t sold by the lessor to the lessee but remains on balance sheet

islamic operating lease standa conditions for shariah compatibility as adop international fiqh academy and a i list four main conditions a to d the last violated in my view by many sukuk with sig consequences
a risk of loss or destruction of lease unless caused by lessee s negligence o misconduct must be borne by lessor insure himself in a shariah compatible

how major maintenance must be born by the the underlying shariah principle of just to be lessor should not be enriched at expense of the lessee beyond the term o a c c while the leased asset is not provid usufruct as in a or b rentals must b suspended or adjusted as the case may r
islamic operating lease stand a c b maintenance operating maintena made the responsibility of lessee

this condition has been compromis sukuk including those issued by idb qatar and others where repurchase a price is the rule rather than the except is a major shariah lapse in my view a many other economists and shariah sc the consequences are serious
islamic operating lease standa d the lessor may not require lesse repurchase the asset at cost or at a predetermined price

consequences of stipulating repur leased asset at original pric a c stipulating repurchase by lessee of the leased asset g principal to the provider of finance lessor hence tra funds from fiqh point of view into a loan
in fact this point of view rating agencies such as standard and poo kristel richard a closer look at ijarah sukuk who sukuk as secured debt

a c sukuk though undoubtedly a welcome important islamic financial innovation potential are still best viewed as proj construction to be developed further t conform to shariah standards
conclusion a c to have true shariah acceptability we h work harder at the substance not merely of sukuk

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DOCUMENT WORD ANALYSIS

Main Category

AlHuda Material\sukuk islamic

KeyWords

sukuk islam asset finance issu certifi financi contract bankable bond ijarah leas structur profit holder rate developed purchase risk investor

DOCUMENT REFERENCES

Number of Pages

16

Published Date

2005-05-25 12:02:47

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Challenges to Making Sukuk Sharia Compalience by Dr. M. Anas

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