What is Sukuk as Islamic Financial Solution and How It Works

Islamic finance policies have been developed through times. As people make more transactions, more complicated trade, and other financial activities, the entire solutions given are derived from the right guide of Moslem faith. One of the most popular solution given people know right now is Sukuk. Of course, Sukuk has its own development and change through times.

  1. Sukuk is an Arabic alphabet. The word means instrument of legal purposes.
  2. Later, people adapt the concept for certificate on financial needs. However, the changes keep happening and Sukuk now is the equivalent of conventional bonds. So, Sukuk is Islamic bonds which are in compliance to Islamic Economic law.
  3. How Sukuk works is unique and quite different to common bonds.
  4. In economic transaction, we know assets. Sukuk works as the expression of ownership on the assets. It can be complete or only partial ownership. Sukuk also shows the potential benefit holder can get from an asset. The benefit will be earned as prescribed on Sukuk.
  5. Especially on secondary market, the money we generated from Sukuk can be traded. We will go through leasing transaction or is also called Ijarah.islamic financial system What is Sukuk as Islamic Financial Solution and How It Works
  6. Several assets like car, house, and electronics purchasing use Ijarah as well right now.
  7. However, this is unlike the common bonds we know on many other countries. Sukuk is really based on assets. It means that we will not find Sukuk unless the assets are real and are owned by particular person or people.
  8. Meanwhile, common bonds can generate money from a condition even without money at all at first. I
  9. n addition to it, Sukuk does not base the interest rate on economic activities like what happens on conventional bonds.
  10. On many ways, this concept may be totally new and different. However, the work of Sukuk has made comfortable support to investors and holders.

If you are making investments in several Islamic countries, you will find Sukuk interesting and really helpful. Even though it is not used worldwide yet, many strong people in countries and areas like Bahrain, Saudi Arabia, Indonesia, and manyothers use Sukuk on their many economic activities.

If you like to make investments on more areas and countries and you are about making investments in Islamic areas, Sukuk should be used on your movements. You should learn more details on this because each country may have different policies for Sukuk. However, in summary, Sukuk is more satisfying than the conventional bonds on several ways.