Fatwa #1409524 March 2006United States of America
What is Sukuk "Islamic Bond?" How can a bond be Islamic?
Question
2) How can a bond be Islamic?
3) Is Qasasul Quran (Stories from the Quran) by Maulana Muhammad Hifzur Rehman Seoharvi authentic? I ask because from the start of the book he tries to find common ground between the theory of Evolution and the Islamic perspective that Allah tala created man with his "hand."
He doesn’t completely out right refute the Theory of Evolution.
07-03-2006: Dow Jones Indexes, Citigroup to launch first Islamic bond index
Dow Jones Indexes and Citigroup Corporate and Investment Banking, both leading global index providers, are launching the Dow Jones Citigroup Sukuk Index, the first that seeks to measure the performance of global bonds complying with Islamic investment guidelines.
In a joint statement on March 7, they said the index, which is scheduled for launch on April 2, was created primarily for use as the benchmark for investors seeking exposure to Syari’ah-compliant fixed-income investments.
"In addition, the index may serve to increase secondary market trading in this growing asset class and facilitate cross-market relative value trading among different asset classes," they said.
According to the statement, the Dow Jones Citigroup Sukuk Index will include investment-grade, US dollar-denominated Islamic bonds, also known as Sukuk, issued in the global market.
More details here. http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_d332a5e1-cb73c03a-1f47ae80-394051eb
Answer
1. We have not reviewed the working of the ‘Sukuk Islamic Bonds’ and therefore are not in a position to comment on the bond.
2. Bonds are generally integrally related to interest. Bond holders are offered a guaranteed return on the principle value of the bond. This arrangement eliminates the element of risk. The Shari’ah only sanctions investments wherein the investor exposes himself to risk in that he will share in both profits or loses. In this instance, the investor assumes ownership of the revenue generating asset (or stock) which is susceptible to both profits and losses. In the conventions bond, the bond holder merely receives a return on monies forwarded without ownership or risk. This is the primary difference between Shari’ah investments and conventional bonds. Other secondary issues which need to be taken into consideration amongst others are: monies should not be invested in Haraam, terms and conditions of trading should be legitimate, e.g. creditors should not be denied their rights, two transactions should not be integrally related, etc. The differences between conventional bonds and Shari’ah compliant investments are vast which will require volumes to highlight them. For an elementary synopsis of the pertinent issues at hand, we refer you the book ‘Islamic Finance’ by Justice Mufti Taqi Uthmaani Saheb.
3. Moulana Hifzur Rahmaan Sawharwi [ra] was one of the illustrious Ulama of the past century. He is universally accepted personality with his works also receiving acceptance across all sections of society. His book ‘Qisasul Anbiyaa’ was originally written in Urdu language. We refer you to the English rendition thereof by Moulana Yusuf Karaan of Cape Town, South Africa.
and Allah Ta'ala Knows Best
Mufti Ebrahim Desai