Islamic Banking

Moslem Finance Group Assessment Our focus has been on two pecuniary products offered by Islamic banks; Sukuk and Murabaha. Sukuk is a shariah compliant alternating(a) to traditional products, however there is still contention regarding its status. The rationalness for this is because conservative scholars do non believe that Sukuk has effectively avoided the break down of riba ( relate). The argument lies in the fact that Sukuk requires payment for the time pull ahead of notes and investors are offered a fixed return on their investments, which erect be said to be similar in fashion to riba ( have-to doe with). In Islam it is haram (not permissible) to trade and sell debts, conventional loans and belief cards; and Sukuk results in debt and thus cant be traded otherwise than face value as both money and debt cannot agitate value over a period of time. In a logical argument issued by The Chairman of the Accounting and Auditing scheme for Islamic Financial 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 apart 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 superposable to conventional bonds as the distribution of profits from enterprises were given at a fixed parting 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 must signify sha res of go out power in commercial/industri! al enterprise or in assets 3. Repayment value to Sukuk holders should be at new commercialise value of asset It has been agreed by scholars that absolute majority 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 depress a full essay, order it on our website: OrderEssay.net

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