Institute of Islamic Banking

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Browsing Institute of Islamic Banking by Author "Abdul Rafay Siddique"

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    Need for global uniform framwork for Islamic financial instruments
    (University of Management and Technology, 2014) Abdul Rafay Siddique
    Islamic financial instruments are confronted by many difficulties due to non-existence of a uniform global framework. A particular problem in developing this framework is the existence of different madhahib within Islam. This research aims to discuss the urgent need to develop a sound and robust universal framework that would prove helpful in creating uniform acceptability of Islamic financial instruments. To provide a basis for conclusion of this problem, this author selected an Islamic financial instrument Sukuk al-Ijarah. It was analyzed why there existed a need for the development of a robust and comprehensive framework for globalization of Islamic financial instruments which should be acceptable to all stakeholders. Moreover, specific steps are also analyzed that must be taken to issue Sukuk al-Ijarah that is acceptable to all madhahib. It was in this context that research was conducted using secondary sources and data was collected for Sukuk al-Ijarah issued by all the madhahib. Data was collected for twenty Sukuk al-Ijarah, basic differences among madhahib were highlighted and then analyzed for few variables to see the possibility of convergence. The results of this study showed that global Sukuk al-Ijarah can be issued as there were many similarities in the rulings among the four Sunni madhahib and Shia madhab. These results were used to find the stipulations of a global Sukuk al-Ijarah that did not raise problem with followers of any madhab. Ingredients were determined that would help make a truly global Sukuk security; a model which can then be replicated for other securities. Thus, an asset-backed Sukuk, with fixed rental, transfer of both usufruct and title on an Islamic underlying, passed to an independent Special Purpose Vehicle (SPV), without guarantee of principal or profit is most probably going to be acceptable by all madhahib.