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Article
Publication date: 7 January 2019

Rashedul Hasan, Abu Umar Faruq Ahmad and Tamiza Parveen

The key purpose of this study is to make awareness for faithful Muslims who are interested to invest in Islamic capital markets so as to enable them making right decision…

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Abstract

Purpose

The key purpose of this study is to make awareness for faithful Muslims who are interested to invest in Islamic capital markets so as to enable them making right decision while considering investment in Sukuk over conventional interest-bearing bonds.

Design/methodology/approach

This study reviews past literature to analyse contemporary Sukuk risks and discusses several mechanisms to mitigate those risks.

Findings

The study shows that Sukuk can be good alternatives to conventional bonds. Sukuk structures need to be further developed to fulfil the Sharīʿah compliance requirements.

Research limitations/implications

This study is exploratory in nature, and as such, it seeks to identify the risks related to Sukuk issuance. Given this limitation, it did not provide empirical evidences relating to any specific category of Sukuk risks.

Practical implications

An in-depth knowledge of Sukuk risks would help both academicians and investors understand the potential problems related to Sukuk structures and take precautions in the early stage to prevent causes of being defaulted or bankrupt.

Originality/value

The risks related to Sukuk have been explored in all potential roots. This study has offered some significant techniques to prevent the relevant risks for investors’ benefits. Information being provided throughout this study is expected to serve potential investors in Sukuk as a guide to make right decisions and enable them to minimise the risk to secure healthy returns on their investments.

Details

Journal of Islamic Accounting and Business Research, vol. 10 no. 1
Type: Research Article
ISSN: 1759-0817

Keywords

Open Access
Article
Publication date: 4 January 2022

Md. Kausar Alam, Abu Umar Faruq Ahmad, Aishath Muneeza, Mosab I. Tabash and Md Adnan Rahman

Sharīʿah Secretariat plays a significant role in assisting Sharīʿah Supervisory Boards (SSBs) in their role in achieving Sharīʿah compliance in Islamic banks (IBs). The…

Abstract

Purpose

Sharīʿah Secretariat plays a significant role in assisting Sharīʿah Supervisory Boards (SSBs) in their role in achieving Sharīʿah compliance in Islamic banks (IBs). The key objective of the study is to develop a organizational framework of the Sharīʿah Secretariat for the IBs in Bangladesh.

Design/methodology/approach

The study applied qualitative case study research. The data have been collected from 17 respondents through semi-structured interviews from IBs and professional experts in Bangladesh.

Findings

This study proposes a full-time Sharīʿah Secretariat and several departments for further enhancement of the Sharīʿah functions in IBs in Bangladesh. The framework proposed in this study covers the formation, functions, composition, qualification, reporting line, independence, remuneration and terms of appointment of the Sharīʿah Secretariat to set a uniform benchmark for all IBs in Bangladesh. It is anticipated that the outcomes of this research will assist to further strengthen the Sharīʿah governance of IBs in Bangladesh.

Research limitations/implications

This research contributed to the national and global regulatory authorities and IBs by proposing a Sharīʿah Secretariat framework for the smooth functioning of the IBs in Bangladesh. The framework proposed in this study covers the formation, functions, composition, qualification, reporting line, independence, remuneration and terms of appointment of Sharīʿah Secretariat.

Originality/value

This study proposed a framework which is considered the first organizational framework so far for the Sharīʿah Secretariat of IBs in Bangladesh. IBs can apply this proposed framework to form their Sharīʿah Secretariat structure.

Details

ISRA International Journal of Islamic Finance, vol. 14 no. 1
Type: Research Article
ISSN: 0128-1976

Keywords

Content available
Book part
Publication date: 16 June 2021

Abstract

Details

Monetary Policy, Islamic Finance, and Islamic Corporate Governance: An International Overview
Type: Book
ISBN: 978-1-80043-786-9

Article
Publication date: 13 May 2020

Md Akther Uddin and Abu Umar Faruq Ahmad

This paper aims to compare and contrast the concept of conventional futures contract from the Islamic law of contract perspectives. The underlying theory and practice of…

Abstract

Purpose

This paper aims to compare and contrast the concept of conventional futures contract from the Islamic law of contract perspectives. The underlying theory and practice of Islamic finance is based on the principles of Islamic law of contract. Although the necessity of derivative instruments such as the case with futures contract is essential for developments in Islamic finance, the permissibility of using these instruments still remains a debatable issue.

Design/methodology/approach

The paper discusses arguments for and against using derivative instruments as in futures, for example, in light with the Qur’an and Sunnah (the Prophet’s traditions), as well as the views of classical scholars, jurists and contemporary researchers. Arguments for and against are analysed systematically to derive a logical conclusion.

Findings

The study finds that majority scholars consider futures contracts as non-compliant with the Islamic law due to the fact that selling something that does not exist, deferment in the both counter values, gharar or ambiguity and excessive risk taking, pure speculation and sale of one debt for another.

Research limitations/implications

The study focuses narrowly on conventional futures contract. Analysing other financial derivative contracts could be a future research endeavour.

Practical implications

The study has so far found the verdict of impermissibility of conventional futures contract in its current form as has been argued by majority scholars in the premise that they do not comply with the Islamic law. Policymakers and industry practitioners need to take this opinion of majority scholars while developing new Islamic financial derivatives.

Originality/value

To the best of the author's knowledge, the present research is the first attempt so far that explained the validity of conventional futures by analysing arguments of classical and contemporary jurists, scholars and researchers.

Details

International Journal of Law and Management, vol. 62 no. 4
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 27 July 2022

Md. Habibur Rahman, Md. Faruk Abdullah, Muhammad Nazmul Hoque and Abu Umar Faruq Ahmad

This study aims to investigate and propose the potential practice of hibah al-ʿumra as a Shari‘ah-compliant policy that would encompass the disbursement of death benefits…

Abstract

Purpose

This study aims to investigate and propose the potential practice of hibah al-ʿumra as a Shari‘ah-compliant policy that would encompass the disbursement of death benefits and facilitate their smooth distribution among the projected beneficiaries of the family Takāful.

Design/methodology/approach

This study uses a qualitative approach. It conducts semi-structured interviews with different Takāful practitioners in Malaysia. This study also consulted a few Shari‘ah scholars regarding their opinions on the application of hibah al-ʿumra in disbursing family Takāful benefits. The thematic analysis is carried out to analyse qualitative data.

Findings

From both Shari‘ah and the relevant industry perspectives, the notion of hibah al-ʿumra has a great potential to disburse the family Takāful benefits to the Takāful participants or nominated beneficiaries. Given the conditional nature of hibah in Takāful, it is argued that there is a scope for imposing some conditions to make hibah al-ʿumra a life grant gift. This is expected to play a significant role in resolving the issues relating to the disbursement of family Takāful benefits among the beneficiaries, where it becomes irrevocable.

Practical implications

In the current practice of family Takāful, in the event of the recipient’s death or divorce, the application of absolute hibah results in the disbursement of Takāful benefits among undesirable beneficiaries. In contrast, in hibah al-ʿumra, it is expected that subject to a condition of withdrawal, its practice would help manage any unwanted situation if other potential beneficiaries are nominated upon signing the agreement at the outset.

Originality/value

This study is expected to contribute to help channel the family Takāful benefits into the desired beneficiaries being the proposed hibah al-ʿumra as a form of conditional hibah. Besides, this type of hiba can be treated as a solution in any adverse situation.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8394

Keywords

Article
Publication date: 6 May 2021

Tauhidul Islam Tanin, Abu Umar Faruq Ahmad and Aishath Muneeza

This study explores the practical application of the Shariah screening process and how it could be enhanced by converging the same with the ethical screening of stocks.

Abstract

Purpose

This study explores the practical application of the Shariah screening process and how it could be enhanced by converging the same with the ethical screening of stocks.

Design/methodology/approach

This study adopts a qualitative research methodology by combining the qualitative descriptive approach and content analysis.

Findings

The findings of this research suggest that there is scope to converge ethical screening of stocks with Shariah Screening as the lex loci applicable to Shariah screening is derived from Shariah, which considers ethics as part of determining its rules.

Practical implications

The data from this study reveal several practical applications, the ultimate goal of which is to help the policymakers and stakeholders understand the relevance of the Shariah screening of stocks and get a streamlined screening process, paving the way to enhance the same using ethical screening criteria to develop its function to become much more relevant irrespective of the denomination of faiths.

Originality/value

This is original research, which is expected to contribute to understanding the extent to which Shariah screening can be enhanced by integrating the ethical stock screening dimension to it.

Details

International Journal of Emerging Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1746-8809

Keywords

Abstract

Details

Monetary Policy, Islamic Finance, and Islamic Corporate Governance: An International Overview
Type: Book
ISBN: 978-1-80043-786-9

Book part
Publication date: 14 December 2018

Abu Umar Faruq Ahmad, Aishath Muneeza, Mohammad Omar Farooq and Rashedul Hasan

Sukuk restructuring primarily aims at offering a debtor more latitude, in form and time, to settle his obligations. To meet Shari’ah requirements of transferring assets to…

Abstract

Sukuk restructuring primarily aims at offering a debtor more latitude, in form and time, to settle his obligations. To meet Shari’ah requirements of transferring assets to Sukuk holders in asset-based Sukuk, the originator usually transfers the beneficial ownership to the issuer special purpose vehicles (SPV). However, in asset-backed Sukuk, the originator sells the underlying asset to an SPV and Sukuk holders do not have recourse to the originator in the event of defaults. Among some key unresolved Shari’ah issues in this regard is whether a change of contract necessitates entering a new contract. Other related issues that conflict with the tenets of Shari’ah are: (1) Sukuk structuring on tangible assets and debts; (2) receiving the full title by the Sukuk holders to the underlying assets in the event of default in case of securities that are publicized as asset backed; (3) Sukuk’s similarity with interest bearing conventional bonds: (a) capital guarantee by the originator or third party, (b) the originators’ promise to repurchase Sukuk at face value upon their redemption, and (c) providing internal and external credit enhancement. The Shari’ah-compliance of the above-mentioned clauses and structures of Sukuk remain debated among the Shari’ah scholars. Based on some specific cases, this study examines the Shari’ah viewpoint on sukuk restructuring and potential solutions to these unresolved Shari’ah issues in light of the past and recent declaration of some Sukuk defaults as non-Shari’ah complaints. Undoubtedly, resolution of these and other unresolved issues pertaining to Sukuk defaults can help strengthen the confidence of investors in Islamic capital market structures.

Details

Management of Islamic Finance: Principle, Practice, and Performance
Type: Book
ISBN: 978-1-78756-403-9

Keywords

Book part
Publication date: 19 December 2016

Abu Umar Faruq Ahmad

Sukuk are popular means for governments to raise money through sovereign issues, and for corporations to obtain finance through corporate sukuk offerings. The purpose of…

Abstract

Purpose

Sukuk are popular means for governments to raise money through sovereign issues, and for corporations to obtain finance through corporate sukuk offerings. The purpose of this study is to critically examine the issues revolving around various aspects of sukuk such as regulation, performance and future challenges from different Asian market jurisdictions.

Methodology/approach

Using various sukuk structures and other literatures, this chapter critically investigates some general legal and regulatory requirements for sukuk issuance, its required infrastructure in various jurisdictions in addition to some other relevant important issues to generate cash flows and raise finance through Islamic capital market (ICM) operations without violating the tenets of Sharī’ah in sukuk structures which ultimately helps the economic growth of the Asian region.

Findings

The study finds that in many Asian countries, a separate and specialised regulatory framework, as demanded by sukuk, is lacking and this instrument is treated under the same regulations as of conventional capital markets and their instruments. Some of the regulations may be appropriate for ICM and sukuk, however, most of these regulations need proper modification in order to treat sukuk with clear understanding.

Practical implications

Being part of a niche and new area of Islamic finance in the global financial market a plethora of confusion exists regarding various aspects of sukuk including regulation, performance and future challenges particularly in Asian jurisdiction where sukuk are largely in operation. Findings from this study can be used as a reference to understand the need of the proper modification of conventional regulations, the performance of sukuk in better ways, and meeting other relevant challenges.

Originality/value

Although the demands for having specialised regulatory framework of sukuk, or at least amendments in the current framework for conventional bonds is gaining momentum worldwide in order to accommodate sukuk in the capital markets according to their peculiar nature, it has not caught much attention of researchers and practitioners involved with Islamic finance. Therefore, this study is expected to add value to regulation, standardisation and performance of sukuk in the Asian market, and it deals with the obstacles in the growth of sukuk, which were not extensively covered earlier by the researchers and the Islamic finance industry practitioners.

Details

Advances in Islamic Finance, Marketing, and Management
Type: Book
ISBN: 978-1-78635-899-8

Keywords

Abstract

Details

Monetary Policy, Islamic Finance, and Islamic Corporate Governance: An International Overview
Type: Book
ISBN: 978-1-80043-786-9

1 – 10 of 27