Islamic Financial Products and
Processes
Muhammad Faisal Shaikh
BankIslami Pakistan Ltd.
Islamic Sukuk- Introduction
Bonds are important part of overall financial system.
Well developed bond markets ensures stable financial
system as it minimize over-reliance on financing from
the banking sector.
The development of the bond market allows for
access to funding with the appropriate maturities, thus
avoiding the funding mismatches. It also allows for the
diversification of risks by issuers and investors.
Islamic Sukuk- Introduction


Dealing in Bonds is not permissible according to
Shariah because of two aspects.
Firstly, they represent a portion of Debt payable by
the issuer. Earning any kind of profit falls under the
category of RIBA as defined in the Hadith
“Every loan that draws any premium is Riba”.
Islamic Sukuk- Introduction


Second aspect pertain to the trading of Bonds.
Shariah prohibits trading of debts (Bai Dayn) as it
involves Gharar.
Islamic Sukuk- Introduction



Sukuks are developed as alternative of Bonds.
A Sukuk represents proportionate actual or
beneficial ownership in an Asset or a Pool of
identified assets.
For a defined period the Risk and Return
associated with such Assets belong to Sukuk
holders which makes their return permissible for
the holder.
Islamic Sukuk- Introduction
Trade of such Sukuks is permissible, because it will be
equivalent to the sale/ purchase of holder’s
proportionate share in the assets.
However, trading of Murabahah and Salam Sukuks is
not permissible.
Islamic Sukuk- Difference with Bonds
Sukuks
Represents the direct pro
rata ownership of the
holder in the assets of
the pool.
Sukuk holder generally
earn return from income
generated through the
asset
Conventional Bond
The bond stands for a
loan repayable to the
holder in any case, and
mostly with interest.
Islamic Sukuk- International Overview




Cumulative issuance outstanding
symbolic bar of $100 billion.
topped
the
Malaysia became the No. 1 issuing country with
54.1% of the value of sukuk issued.
The dollar made a partial comeback but local
currencies were the denomination of choice for sukuk
issuance.
Big new players tapped the market like General
Electric Capital Corp. and International Finance
Corporation.
Islamic Sukuk- International Overview
The 2010 pipeline remains healthy with about $20
billion of sukuk publicly announced in the past that is
likely to come to market if conditions permit.
In addition to these unofficial market sources says that
about $10 billion more could potentially enter the
pipeline. If that comes to market, total sukuk issuance
in 2010 could approach the current 2007 record of
$34.3 billion.
Islamic Sukuk- International Overview


The UK Treasury and the Financial Services Authority
(FSA) have prepared an amendment in Financial
Services and Markets Act 2000 (Regulated Activities)
Order 2001 (S.I. 2001/544) to remove barriers and
uncertainty in the regulation of alternative finance
investment bonds (sukuk).
Following consultation with the industry, the statutory
instrument, the Financial Services and Markets Act 2000
Order 2010, was sent to the House of Commons in midJanuary, and the Brown government is confident that the
new regulations will come into effect by the end of
February. These measures will reduce compliance and
legal costs for these instruments, and facilitate the
issuance of corporate sukuk in the UK.
Islamic Sukuk- International Overview
“The government’s objectives on Islamic finance,”
reiterated Exchequer Secretary to the Treasury Sarah
McCarthy-Fry, MP, “are to enhance the UK’s
competitiveness in financial services by maintaining
the UK’s position as a Western leader for international
Islamic finance; and to ensure that everybody,
irrespective of their religious beliefs, has access to
competitively priced financial products. This measure
is another important step in the development of the
Islamic finance sector in the UK and will help to
provide a level playing field for Islamic financial
products in this country. It is good news for the UK
economy and for our Islamic finance industry.”
Islamic Sukuk- International Overview


Luxembourg took an important first step toward
developing the Duchy into the latest European hub
for Islamic finance, especially Islamic capital
markets, when it published a new tax circular on the
treatment of a whole range of Islamic finance
products
including
Murabaha,
Musharaka,
mudarabah, istisna, ijarah, ijarah wa Iktina and
sukuk (Islamic bonds).
The circular confirms the classification of sukuk as
debt for Luxembourg tax purposes. Consequently,
yield payments under the sukuk are treated under
domestic tax law as deductible interest expenses at
the level of the paying entity.
Islamic Sukuk- International Overview



Under the Finance Bill 2010, which came into effect
in January 2010, the Irish Ministry of Finance has
introduced significant amendments to facilitate
Islamic finance transactions in Ireland.
The legislation clarifies that the Sukuk Certificate
should be considered a security and confirms that
the investment return on that certificate should be
treated as interest on a security for the purposes of
the Taxes Act (subject to restrictions).
The bill also introduces amendments to the stamp
acts to ensure that no stamp duty will arise on the
issue, transfer or redemption of a sukuk certificate.
Islamic Sukuk- International Overview

The Strategy and Finance Committee of the Korea's
National Assembly (Parliament) is set to approve a
bill aimed at facilitating tax neutrality for the
issuance of sukuk in Korea during its next sitting at
the end of February 2010.
Islamic Sukuk- Local Overview



In Pakistan, the first Islamic Sukuk was issued in
2002 when Sitara Chemicals Industries issued its
MTFC.
However, the market really started in FY 2005 and
since then Sukuks worth at least Rs. 30 billion has
been issued or are in the process of issuance.
Market is growing at a very healthy rate as large
corporates and conglomerates such as WAPDA,
Engro Chemicals, PEL, EDEN Developers, Maple
Leaf Cement, etc are using Sukuk to fund their
requirements.
Islamic Sukuk- Types


The issuance of Sukuk requires an exchange of a
Shariah compliant underlying asset for a financial
consideration through the application of various
Islamic commercial contracts such as the
Mudarabah, Musharakah, Ijarah, Istisna, Salam and
Murabahah.
The equity-based nature of Mudarabah and
Musharakah Sukuk exposes investors to the risks
connected with the performance of the project for
which the financing is raised.
Islamic Sukuk- Types
In contrast, issuance of Sukuk on principles of Ijarah
and Murabahah yields deterministic receivable and
hence result in predictable and somewhat fixed
returns for the prospective investors.
Sukuk Al Ijarah
Islamic Sukuk- Sukuk Al Ijarah




Ijarah is an Islamic alternate of conventional leasing.
Issuing certificates of ownership of assets, leased to
a particular customer is known as Sukuk Al Ijarah or
simply Ijarah Sukuk.
Ijarah Sukuk concept is one of the most popular
concepts among issuers of global Islamic Sukuk.
A simple process is explained next.
Islamic Sukuk- Sukuk Al Ijarah


If a Company requires, for example, Rs. 500 million
for the purchase of land, real asset, equipment etc it
can issue Ijarah sukuk equaling that amount in small
denominations, say Rs. 500,000 each.
After collection of funds from the investors the
company either purchases the asset on behalf of the
Sukuk investors or transfers the ownership of the
already acquired asset to sukuk holders usually by
establishing a Special Purpose Vehicle (SPV), which
owns the underlying assets.
Islamic Sukuk- Sukuk Al Ijarah


The investor or sukuk holders owns the asset held
by SPV as Trustee in the form of Sukuk. The asset
is then leased to the firm and the lease proceeds
from the asset is distributed to the sukuk holders as
return/dividend.
The returns on the sukuk certificates could be
either fixed or floating. As the expected returns
(pre-determined rental payments) are fixed and
can be treated as predictable like the coupon
payments of a conventional bond.
Islamic Sukuk- Sukuk Al Ijarah
 Ijarah sukuk can be issued through a financial
intermediary, a bank or a brokerage house or
directly by the users of the lease asset. A third party
can also guarantee rental payments.
 Since the yield is predetermined and the underlying
assets are not liquid but tangible and secured, thus
the Ijarah certificate can be freely traded in the
secondary markets at par, premium or discount.
Sukuk Al Ijarah
Structure
ABC
Ltd.
(Corporate)
ABC Ltd. wishes to purchase a new asset and plan to
raise finance through issuance of Islamic Sukuk.
Supplier
Supplier of the Asset is
identified and negotiations is
finalized by ABC Ltd.
ABC
Ltd.
Supplier
ABC
Issuer
SPV
(LLC
100%
owned
ABC Ltd.)
Ltd.
SPV is created by ABC Ltd. as a limited liability
Company.
SPV issues certificates and receives proceeds which
are used to purchase asset from the supplier
Supplier
Payment made to
Supplier
Title is transferred to
SPV
ABC
Ltd.
Issuer
SPV
(LLC
100%
owned
ABC Ltd.)
Investors
SPV holds Asset as
Trustee and leases the
plant to ABC Ltd. as per
rules of Ijarah
SPV holds
Plant/
Asset as
Trustee
Issuer
SPV
ABC
Ltd.
SPV leases
Plant to ABC
Ltd. on
Ijarah
Investor
ABC Ltd.
(Lessee)
Issuer
SPV
Periodic Lease Rentals
Investors
Semi-annual coupon
distribution amounts
ABC Ltd. (Lessee) pays periodic rentals to SPV for
tenors & amounts matching the coupon & tenor of the
Sukuks
Exercises the purchase undertaking.
Asset transferred to ABC Ltd.
ABC Ltd.
(Lessee)
Pays the
exercise price at
dissolution
Issuer
SPV
Investors
Redeems the
Trust Certificates
at dissolution
ABC Ltd (Lessee) give the SPV an irrevocable purchase
undertaking to purchase the Asset at maturity.
Exercise Price = Initial Purchase Price of Asset + service costs.
Asset is transferred back on maturity, upon payment of the
Exercise Price to the SPV / Sukuk Holders.
Islamic Sukuk-Sukuk Al Ijarah
Important Conditions
 Ijarah Sukuk represents the holder's proportionate
ownership in the leased asset.
 The holder will assume the rights and obligations
of the owner/lessor to the extent of his ownership.
 As owner the holder will have the right to enjoy a
part of the rent according to his proportion of
ownership in the asset.
Islamic Sukuk-Sukuk Al Ijarah
Important Conditions
 In the case of total destruction of the asset, holder
will suffer the loss to the extent of his ownership.
 SPV rules in Pakistan does not allow SPV to hold
actual tangible assets, therefore, the asset is
shown on the books of the client itself instead of
SPV.
Islamic Sukuk-Sukuk Al Ijarah
Essential Condition
“It’s essential that the Ijarah Sukuks are
designed to represent real ownership of the
leased assets, and not only a right to receive
rent.”
Islamic Sukuk-Sukuk Al Ijarah
Innovation in Pakistan
 In Pakistan essentialy the same structure has
been used to develop Sukuks based on
Diminishing Musharakah.
Islamic Sukuk-Sukuk Al Ijarah
Innovation in Pakistan




There are two basic differences in Diminishing
Musharakah Sukuks:
Underlying Assets is jointly owned by investors and
issuer according to specified percentage.
Ownership is also transferred periodically to the
issuer.
Ijarah is essential part of a Diminshing Musharakah
transaction under Shirkatul Milk.
Islamic Sukuk-Sukuk Al Ijarah
Documentation
Documents executed in a Sukuk Issue based on
Diminishing Musharakah (under Shirkat-ul-Milk
arrangement) are:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Investment Agency Agreement
Asset Purchase Agreement
Musharakah Agreement
Service Agency Agreement
Payment Agreement
Undertaking to Purchase Sukuk Units
Undertaking to Sell Sukuk Units
Trust Deed
Letter of Hypothecation/Other Security Documents
Islamic Sukuk-Sukuk Al Ijarah
Investment Agency Agreement
Through this Agreement, all Participating Islamic
Financial Institutions ('Investors') appoint a Bank/FI as
'Investment Agent' to carry out all actions (including
entering into all Sukuk related Transaction documents)
for and on behalf of all Investors in respect of Sukuk
Issue.
Islamic Sukuk-Sukuk Al Ijarah
Asset Purchase Agreement
 Investment Agent (acting for and on behalf of
Investors) buys undivided beneficial ownership in
specified fixed assets ('Musharakah Assets') in
partnership with Issuer at a pre-agreed price
(equivalent to the Sukuk Issue Amount) via the
Asset Purchase Agreement.
 Legal title of the assets remains with the Issuer and
only the beneficial title will remain with the
Investors.
Islamic Sukuk-Sukuk Al Ijarah
Asset Purchase Agreement
Musharakah Assets can be:
(i) Already existing, and owned by the Issuer. This
would become a Sale and Lease Back (SLB) case.
SLB cases are done only after approval of Shariah
Adviser and are undertaken mainly to settle existing
conventional banking loans of Issuer.
(ii) New, and would be purchased from third party.
E.g. fixed assets purchased for expansion projects.
Islamic Sukuk-Sukuk Al Ijarah
Musharakah Agreement
 Investment Agent (acting for and on behalf of
Investors) and Issuer will enter into a Musharakah
Agreement to jointly own Musharaka Assets.
 Each Investor’s entitlement to the Musharakah
Assets will be undivided and shall for the purpose
of more particular determination constitute of
‘Sukuk Units’. Share of each Co-Owner will be
specified in the Musharakah Agreement.
Islamic Sukuk-Sukuk Al Ijarah
Service Agency Agreement
Issuer is appointed 'Service Agent' via signing of
Service Agency Agreement between Investment
Agent (acting for and on behalf of Investors) and
Issuer.
Service Agent will be responsible for:
(i)Ensuring all major maintenance of the Musharakah
Assets;
Islamic Sukuk-Sukuk Al Ijarah
Service Agency Agreement
(ii) Paying ownership related expenses and taxes; and
(iii)Arranging Takaful/ Insurance of the Musharakah
Assets.
 Such ownership related expenses/taxes incurred by
Service Agent on behalf of Musharakah Co-Owners
will be reimbursable from Investment Agent.
Islamic Sukuk-Sukuk Al Ijarah
Payment Agreement
 Investment Agent (acting for and on behalf of
Investors) will allow Issuer to use Investors' share
of the Musharakah Assets against periodical
KIBOR-benchmarked Rental Payments in terms
of the Payment Agreement.
 From Shariah perspective, this is basically an
Ijarah Agreement. The tenor of the Payment
Agreement will be matched with the Musharakah
tenor.
Islamic Sukuk-Sukuk Al Ijarah
Undertaking to Purchase Sukuk Units
Undertaking to Purchase Sukuk Units is a
promise undertaken by Issuer in favor of the
Investment Agent for:
(i) the periodical purchase of Sukuk Units
(representing
Investors'
undivided
beneficial
ownership in the Musharakah Assets); and
(ii) the purchase of all outstanding Investors' Sukuk
Units in case of an Event of Default.
Islamic Sukuk-Sukuk Al Ijarah
Undertaking to Sell Sukuk Units
Undertaking to Sell Sukuk Units is a promise
undertaken by the Investment Agent in favor of Issuer
granting a call option to Issuer to purchase all or part
of the Sukuk Units.
In SLB cases, purchase/sale of Sukuk Units will only start
after at least one year from the Musharakah Commencement
Date/Asset Purchase Date.
Islamic Sukuk-Sukuk Al Ijarah
Trust Deed
Trust Deed will be executed between Trustee
(appointed by Investors for the Sukuk Issue) and
Issuer detailing the responsibilities of the Trustee
during the tenor of the Sukuk Issue.
Islamic Sukuk-Sukuk Al Ijarah
9.
Letter of Hypothecation/Other Security
Documents
Letter of Hypothecation and Other related Security
Documents will be executed by Issuer in favor of
Trustee for security purposes.
Sukuk Al Salam
Islamic Sukuk-Sukuk Al Salam
 Salam is an Islamic mode of finance. Under a
Salam transaction the seller makes an advance
payment for goods which are to be delivered
later provided the goods are defined and the date
of delivery is fixed
 Government of Bahrain first issued Salam
Sukuks as an alternate to short term government
treasury bill.
Islamic Sukuk-Sukuk Al Salam
 Under the transaction Government took an
advance payment from the investors for a future
delivery of Aluminum ingots. A paper was issued
as an acknowledgment of receipt which is
known as Salam Sukuk.
 Upon delivery of Aluminum ingots to the
investors at the time of completion of Salam
contract,
Government sold ingots to third
parties as agent of the investors.
 The difference between Sale and Purchase
price was the profit of the investors.
Islamic Sukuk-Sukuk Al Salam
On the same lines Government of Pakistan can
also issue Salam Sukuks to cater to the short term
liquidity management issues of Islamic Banks.
A proposed structure is discussed next.
Islamic Sukuk-Sukuk Al Salam
 On behalf of Govt. of Pakistan, Zarai Taraqiati
Bank Limited (ZTBL) may sell the commodity to
the buyers on Salam basis which in this case
would be Islamic Banks.
 In this transaction, various banks may participate
in the Sukuk and one Bank would act as trustee
nominated to represent other banks wishing to
participate in the Al Salam contract.
Islamic Sukuk-Sukuk Al Salam
As consideration for advance payment, ZTBL will
undertake to supply a specified amount of a
commodity say wheat at a future date. ZTBL would
arrange the commodity by providing Shariah
compliant funding to farmer e.g. It may purchase
wheat on the basis of Salam from the farmers.
Simultaneously a third party such as PASSCO may
provide an undertaking to the Trustee to purchase
wheat at an specified higher price thus ensuring
profit of the investor banks.
Islamic Sukuk-Sukuk Al Salam
 Upon delivery Trustee would appoint PASSCO its
agent to take delivery from ZTBL.
 After taking delivery its premises PASSCO will
inform the Trustee which would sell the wheat to
PASSCO.
 Payment received from PASSCO would be
distributed among the investor banks along with
the profit.
 Banks may also provide funding on the basis of
Murabahah to PASSCO for the purchase of same
wheat.
Islamic Sukuk-Sukuk Al Salam
Important Conditions
Salam Sukuk represent investors shares in the
Advance Price paid to the seller.
Since its a dayn, it cannot be traded in the
secondary market.
Islamic Sukuk-Sukuk Al Murabahah
 Sukuks can also be issued against a Murabahah
transaction. Under the transaction investors
would provide funding to purchase some assets
for the issuer. Acknowledgment of their
investment would be regarded as Murabahah
Sukuk.
 The asset would be purchased from its supplier
and would be immediately sold to the issuer
against deferred price.
 Profit earned from the transaction would be
distributed among the investor proportionately.
Islamic Sukuk-Sukuk Al Murabahah
Important Conditions
 Murabahah Sukuk represent investors shares
in receivable from the purchaser
 Since its dayn, it cannot be traded in the
secondary market.
Sukuk Al
Musharakah
Islamic Sukuk-Sukuk Al Musharakah
 Musharakah is a mode of financing against which
Sukuks can be issued.
 If a comapany required financing for any of its
project through Musharakah it can issue Sukuks
against which investors would provide funding as
per the rules of Musharakah.
Islamic Sukuk-Sukuk Al Musharakah
 Every
Sukuk
would
represent
holder's
proportionate ownership in the assets of the
Musharakah.
 Once the majority of the cash amount is
converted into fixed assets, these Musharakah
Sukuk can be treated as negotiable instruments
in the secondary market.
.
Islamic Sukuk-Sukuk Al Musharakah
Important Conditions
 Profit earned by the Musharakah is shared
according to an agreed ratio between the Issuer
and Investors at an agreed ratio.
 Loss is shared on pro rata basis.
 Profit & Loss is shared between the investors as
per investment ratio only.
Islamic Sukuk-Sukuk Al Musharakah
Important Conditions
 To ensure tradability of the Sukuks following
condition should be adhered to:
 All the assets of the Musharakah should not be
in liquid form.
 At least 20% of the value of Portfolio should be
invested in non-liquid assets.
Islamic Sukuk-Sukuk Al Musharakah
Musharakah Sukuks can be used for number of
purposes including:
Construction of Projects and factories
Expansion Projects
Working Capital Finance
Sitara's Musharakah's TFC advised and arranged by
Meezan Bank Ltd. is an excellent example of a
Musharakah Sukuks.
Musharakah Term Finance
Certificates
by
Sitara Chemicals Industries Ltd
Islamic Sukuk-Sukuk Al Musharakah
Sitara Chemical Industries Limited
 Incorporated In Year 1981, Listed on All Stock
Exchanges in Pakistan.
 Commencement Of Commercial Production in
1984.
 The Company’s Core Business is Manufacturing
of Caustic Soda - Largest Producer Of Caustic
Soda In Pakistan.
Islamic Sukuk-Sukuk Al Musharakah
Issuer
Sitara Chemical Ind.
Total Issue Size
Rs. 360 Million
Private Placement
Rs. 255 Million
Public Issue
Rs. 105 Million
Tenor
5 years (Aggregate)
Profit Payment
Six monthly
Based on profit and loss sharing on the Operating
profits of the Chemicals Division
Issue Value of Rs 360 Mn
PSR for 1st Rs 100 Mn
Operating Profit Level -1
For each Subsequent Rs
100 Mn of Operating
Profit
MTFC
Holders
Company
MTFC
Holders
Company
100% O/S
43%
56.8%
7.2%
92.8%
67% O/S
28.9%
71.1%
4.8%
95.2%
33% O/S
14.3%
85.7%
2.4%
97.6%
Islamic Sukuk-Sukuk Al Musharakah
Profit & Loss Sharing
Profit was linked to the Operating Profit of the Chemical
Division.
Level 1 Profit: On First Rs. 100 Million Operating Profit
@ 12% p.a. of the Outstanding Principal.
If Operating Profit is less than Rs. 100 Million then:
Actual profit entitlement rate = (Actual Operating
profit/ Rs.100 million)* 12%
Islamic Sukuk-Sukuk Al Musharakah
Profit & Loss Sharing
Level II Profit:
2% p.a. of the outstanding principal on each
subsequent Rs. 100 million operating profit(over and
above first Rs. 100 Million).
If operating profit falls between the two brackets of Rs.
100 million then:
Profit entitlement rate=(Actual operating profit/Rs. 100
Million) * 2%
Islamic Sukuk-Sukuk Al Musharakah
Profit & Loss Sharing- Takaful Reserves
 The Company formed and maintains Takaful
Reserve during the tenor of the TFCs to mitigate
the risk of loss for the TFC holders.
 TFC holders also contributed 25% (1/4th ) of their
level II Profit to Takaful reserve annually during
the tenor of the TFCs.
Islamic Sukuk-Sukuk Al Musharakah
Profit & Loss Sharing- Takaful Reserves
 The Company transfered Rs 50mm in the
reserve.
 In case of no losses during TFCs tenor the
amount contributed by the company and TFC
holders will be paid on final settlement.
Islamic Sukuk-Other types
 Sukuks are also issued under other Islamic mode
of finance and currently much focus is given
Sukuk Al Intefah which is transfer of usufruct
instead of ownership of the asset.
 Other types include Sukuk Al Muzar'a
(sharecropping), Sukuk Al Musaqa (irrigation),
Sukuk Al Mugharasa (agricultural) etc.
Islamic Sukuk-Other types
 Sukuks are also issued under hybird structures
where number of Islamic modes of finance are
used to issue a single Sukuk.
 Under these structures each of Islamic mode is
applied at different intervals to cater to different
requirements of the issuer.
.
Islamic Sukuk-Standardization
AAOIFI has also issue Shariah standards for Sukuks
and its expected that issuance of these standards
would help reducing differences in fatwas issued for
Sukuks.
Islamic Sukuk-Criticism
 Some Sukuks are criticized for their
resembelence with conventional bonds.
close
 Many times these closeness is created to adhere
to the tax and other regulatory laws of the country.
 For example, in Pakistan SPVs cannot hold actual
assets. For this reason assets cannot be carved
out from the balance sheet of the issuer which
creates complexities in identification of the assets
and only a hypothecation charge ensures bank's
benefical ownership in the Musharakah assets.
.
Islamic Sukuk-Criticism
 Similarly, concept of the Diminishing Musharakah
financing is not there in the stamp duty laws of
Pakistan, which compels banks to sell share in
assets without any legal registration.
 It should be noted that concept of Diminishing
Musharakah is recognized in British stamp duty
laws since April 2003.
 Nevertheless, not all of this criticism is incorrect,
and therefore
it should be ensured that
unesseccary usage of artificial structures should be
avoided as much as possible.
Islamic Sukuk-Criticism
 The problems could be resolved by Shariah rating
systems
 This will help investors in making informed
decisions regarding the authenticity of the Shariah
structure of the Sukuk.
Islamic Sukuk-Benefits
 Sukuk can be used very effectively as a halal
alternate to conventional bonds for providing
funding for matching maturities and without
relying too much on commerical banking sector.
 Another aspect of Sukuks which make them more
effective than bonds is there ability to mobilize
and motivate investors to work for the overall
benefit of the issuer.
Islamic Sukuk-Benefits
Sukuks for Government Projects
 Sukuks based on Ijarah can be used very
effectively to finance Government projects.
 If general public is involved in the construction of
these project through issuance of Sukuks, it can
give them sense of ownership.
 Effective usage of such Sukuk would increase the
ratio of success and ratio of sustainability of the
projects by many folds.
.
Islamic Sukuk-Benefits
Sukuks by Private Sector
 Corporate Sector can also benefit from unique
characteristic of Sukuks.
 Musharakah Sukuks can be used to associate
general customer with the company.
 Sense of ownership and share in the profit of the
company can be used as a marketing tool for the
products of the company especially in FMCG
sector.
Islamic Sukuk-Benefits
Sukuks by Private Sector
“The more company earns the more return investor
would get” concept can revolutionalize sales.
Even Sukuks Al Ijarah would help the companies to
position themselves as an caring member of the
society by involving community in the business of the
company.
Islamic Sukuk-Conclusion
 Sukuks can be used very effectively to obtain
Shariah Compliant funding which surely bring
Allah's blessing and barakah for the business.
 Issuers can also benefit from the huge increase in
liquidity in the Islamic world, and can tap on these
new sources of funds. Raising funding from the
Islamic bond market in the current environment
has been 10 to 20 basis points lower than
mainstream bonds.
Islamic Sukuk-Conclusion
.And whosoever fears Allah and keeps his duty
to Him, He will make his matter easy for him...
(Surah Al Talaq Ayat 04)