Islamic Banking

Islamic Finance Group Assessment Our focus has been on two pecuniary products offered by Islamic banks; Sukuk and Murabaha. Sukuk is a sharia law compliant alternating(a) to traditional products, however there is still hostility regarding its status. The rationalness for this is because conservative scholars do non believe that Sukuk has effectively avoided the decompose of riba ( relate). The argument lies in the fact that Sukuk requires payment for the time push of notes and investors are offered a fixed return on their investments, which laughingstock be said to be similar in style to riba ( come to). In Islam it is haram (not permissible) to trade and sell debts, conventional loans and belief tease; and Sukuk results in debt and thus cant be traded another(prenominal) than face value as both money and debt cannot interpolate value over a period of time. In a logical argument issued by The Chairman of the Accounting and Auditing scheme for Islamic Fin ancial Institutions (AAOIFIs) Sharia Board, Sheikh Taqi Usmani stated that 85 per cent of the GCC Sukuks do not comply with the Sharia principles and thereby, dont toss away(p) to be called Islamic at all. One of the key points highlighted by Sheikh Taqi Usmani was the regular Distributions of profits to Sukuk Holders.

This was said to be indistinguishable to conventional bonds as the distribution of profits from enterprises were given at a fixed fortune based on interest rates (LIBOR). Sheik Taqi Usmani also identified three criteria for Sukuk to be sharia complaint; 1.Payments to Sukuk holders must be a percentage of profits (after costs etc incurred by business) 2.Sukuk mus t signify shares of for modernize power in! commercial/industrial enterprise or in assets 3. Repayment value to Sukuk holders should be at true commercialise value of asset It has been agreed by scholars that volume of Sukuk issues are not sharia compliant and after the statement aforementioned was released the world-wide Sukuk market shrunk from US$50bn in 2007 to approximately...If you want to get a full essay, order it on our website: OrderEssay.net

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