Developing Short Term Islamic T-Bills

Introduction:

Islamic fixed-income securities are already emerging as a significant class of asset, and are

as potentially important for the Muslim investor as conventional bonds are for investors

generally. In addition, for non-Muslims who already own conventional bonds, the acquisition

of sukuk introduces a new asset class into their portfolios, bringing further welcome

diversity and possibly reducing risk

Recent modernization in Islamic industry has changed the dynamics of Islamic financial industry. The demands for Islamic securities have become extremely popular during the last few years and has gained acceptance as an alternative to feasible financial products

Sukuk has become one of the most significant mechanisms to raise finance through Islamic structures. Apart from the obvious attractiveness to muslim investors, it may also attract conventional investors who are looking for attractively priced returns

Defintion of sukuk:

Sukuk plural of sakk means legal instrument, deed or check.Sukook is the Arabic name for financial certificate but also may be considered as shariah complaint bonds. Although sukook is referred to as Islamic bonds, it is better described as asset based investment, as the investors own an undivided interest in the underlying tangible asset which is proportionate to investment.

What is a sukook?

Sukuk in general may be understood as a shariah compliant ‘Bond’. In its simplest form sukuk represents ownership of an asset or its usufruct.

The claim embodied in sukuk is simply not a claim to cash flow , but a claim to ownership. money raised by issuance of sukook certificates are used to invest in an underlying asset, a trust is declared over that particular assets and therefore the certificate holder will own a interst in that asset in proportion to his investment .therefore the investor is entitled to a proportion of return generated by that asset

Mechansin of Sukook Bond:

Sukuk (plural) are unique fixed-income vehicles...