What is the meaning of sukuk?

A sukuk is an Islamic financial certificate, similar to a bond in Western finance, that complies with Islamic religious law commonly known as Sharia.

What is sukuk mudarabah?

A form of sukuk derived from the mudaraba partnership structure. In a sukuk al-mudaraba: The party seeking financing (mudareb) enters into an agreement with a special purpose vehicle (SPV) to manage certain assets owned by the SPV. The SPV acquires the assets to be managed using the proceeds of a sukuk issuance.

How does a sukuk work?

Sukuk are Sharia-compliant financial certificates through which investors gain partial ownership on an issuer’s assets until the Sukuk maturity date. While Bonds are financial certificates through which investors lend money to the issuer, indicating an obligation for repayment at maturity date.

Is murabaha Halal or Haram?

In case of Murabaha, the bank sells an asset and charges profit which is a trade activity declared halal (valid) in the Islamic Shariah. Whereas giving loan and charging interest thereupon is pure interest-based transaction declared haram (prohibited) by Islamic Shariah.

Why is murabaha popular?

One of the factor that made Murabaha Financing very famous and popular is that it is flexible mode of finance and also essential. The countries that practice trade and at the same time they practice Islamic Finance, found Murabaha-based financing very suitable for Import and Export transactions.

How does sukuk Mudharabah work?

The main principle in a Sukuk mudharabah is that, the investors are dormant business partners who do not participate in the management of the underlying asset, business or project. The party who utilises the funds on the other hand (the issuer), is the working partner.

What is sukuk structure?

To structure sukuk, the entity seeking to raise finance (“originator”), will typically incorporate a special purpose vehicle (SPV), and transfer title to the assets it intends to finance through sukuk. The SPV will then issue sukuk and use the funds raised to pay the originator for the assets.

How is sukuk structure?