Sukuk

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• published: 21 Nov 2014
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Sukuk (Arabic: صكوك‎, plural of صك Sakk, "legal instrument, deed, check") is the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds. Since fixed income, interest bearing bonds are not permissible in Islam, Sukuk securities are structured to comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest. This is generally done by involving a tangible asset in the investment, such as by giving partial ownership of a property built by the investment company to the bond owner. The bond owner is then able to collect his profit as a rent, which is allowed under Islamic law. According to Global Islamic Finance Report 2012 Global Islamic Finance Report, $1.34 trillion of assets are being managed according to Islamic investment principles. Such principles form part of Shari'ah, which is often understood to be ‘Islamic Law’, but it is actually broader than this in that it also encompasses the general body of spiritual and moral obligations and duties in Islam. In the Persian Gulf region and Asia, Standard & Poor's estimates that 20 per cent of banking customers would now spontaneously choose an Islamic financial product over a conventional one with a similar risk-return profile. This video is targeted to blind users. Attribution: Article text available under CC-BY-SA Creative Commons image source in video