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Sukuk (Arabic: صكوك, plural
of صك sakk, "legal instrument, deed, check") is the Arabic name for a
financial certificate but can be seen as an Islamic equivalent of bond.
However, fixed income, interest bearing bonds are not permissible in Islam,
hence Sukuk are securities that comply with the Islamic law and its
investment principles, which prohibits the charging, or paying of interest.
Financial assets that comply
with the Islamic law can be classified in accordance with their tradability
and non-tradability in the secondary markets. Conservative estimates by the
Ten-Year Framework and Strategies suggest that over $700 - 900 bn of assets
are managed according to Islamic investment principles. Such principles form
part of ?Shari?ah?, which is often understood to be ?Islamic Law?, but it is
actually broader than this in that it also encompasses the general body of
spiritual and moral obligations and duties in Islam.
Sharia-compliant assets worldwide are worth an estimated $500 billion and
have grown at more than 10 per cent per year over the past decade, placing
Islamic finance in a global asset class all of its own. In the Gulf and
Asia, Standard & Poor's estimates that 20 per cent of banking customers
would now spontaneously choose an Islamic financial product over a
conventional one with a similar risk-return profile.
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