Shaikh Nezam, who presided over the Waqf Fund 3rd monthly meeting, shed the light on the topic under discussion ‘Perpetual Sukuk – Shari’a Considerations.’
The Waqf Fund, a Bahrain-based special fund to support Islamic finance training, education and research, hosted its third Shari’a Scholar session with leading Islamic finance scholar Shaikh Nizam Yaquby.
Over 25 shari’a resources from 13 financial institutions attended the session, which was held at the Central Bank of Bahrain (CBB) premises.
After a brief talk from the learned scholar a two hour long interactive session followed during which the participants asked questions and gave their comments while Shaikh Nizam responded in detail.
Shaikh Nizam explained that due to their attractive features, low rate of interest, non-dilutive, no redemption, etc., they have been popular amongst issuers.
With the oncoming of Basel III which classifies perpetual bonds / Sukuk as tier 1 capital, Islamic banks have an incentive to issue perpetual Sukuk. From a Shari’a compliance perspective, Shaikh Nizam hailed the financial innovation as a welcome development for Islamic banks, large corporates and governments interested to finance infrastructure projects. This is because of risk participation and no purchase undertaking (which has been criticized by scholars as a questionable practice). He also identified some common concerns about the structure of perpetual Sukuk but concluded that those can be easily addressed.
A highly interactive session followed in which Internal Shari’a Reviewers of Bahrain based Islamic financial institutions asked questions and shared their opinions and experiences. The participants provided positive feedback about the session and praised the Waqf Fund for this initiative.