Law and Humanities
Published: 17 August 2023
The Concept of Sukuk and its Applications in Contemporary Islamic Financial System
Yusuf Sani Abubakar, Seeni Mohamed Nafees, Sulaiman Dorloh, Rajali Haji Aji
Sultan Sharif Ali Islamic University, Brunei Darussalam
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Keywords: Sukuk, Islamic Bond, Islamic Finance
Sukuk is the Arabic term for financial certificates, which are also commonly referred to as Shariah-compliant bonds. Sukuk was developed as an alternative to conventional bonds, which are considered by many Muslims to be impermissible because they involve elements which are prohibited or discouraged such as usury (riba), uncertainty (gharar) and gambling (maisir). The paper adopts qualitative research methodology which relies on secondary data in form of textbooks, journals, newspapers, related websites etc. After discussing the concept of Sukuk that covered topics such as overview of sukuk; classifications of sukuk; types of sukuk; Shariah issues in Sukuk etc. it is found that sukuk securities are structured to be Shariah compliant by distributing profits and not interest, and generally include a tangible asset in the investment. For example, sukuk securities may be partial ownership of a property built by the investment company (and held in a special purpose vehicle) so that the sukuk holders can collect the property's profits as rent (which is permissible under Islamic law). However, there are still various Shariah issues in the different types of sukuk in the market.
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