There were many questions that were raised last year, 2009 regarding the compliance of the sukuk bonds with the clauses of the Sharia law. There are many industry experts too who have warned of an impending death of the Islamic finance. But the statistics that will show the latest sukuk issuances globally will defy the idea that it is an industry on the verge of death. In the first two quarters of 2009, there have been issuances of $73 billion worth of sukuk bonds throughout the world. The figure was $61.8 billion dollar in the year 2008 and $27.5 billion in 2007.
In most countries throughout the world, there have been banks supporting Islamic finance. In the USA, London holds almost 25 companies that are promoting some forms of Islamic financing. BLME is one of the largest banks that are entirely compliant to the Shariah law that is operating in Britain. The Islamic Bank of Britain that opened in the year 2004 has been predicted to double within the next five years. Moreover, a large number of Britain’s conventional banks have opened their “Islamic windows” in order to commence the Islamic banking. Throughout the globe the Islamic assets have been rated between $500 billion and $1 trillion and are expected to maintain a steady growth of about 10-15% per year.
The basic concepts of Islamic finance that has contributed to this growth, goes back 1400 years but the world’s first most modern Islamic bank opened not before the year 1975. The Shariah law, that is the legal law of Islam, prohibits investing in certain industries or particularly products like alcohol, pork or tobacco. The Koran also forbids usury of any kind and thus they are also prohibited from charging interest on any financial transaction. Sukuk, a form of Islamic bond, demands collateral of a tangible asset that will produce a significant amount of financial return in future.
There is still a need of scrutiny to ensure the growth of this particular market. The success of sukuk bonds in the recent market has definitely proved the growth and popularity of the Islamic finance market but there is more research needed to test new products and prove whether or not such products can effectively provide debt relief financially stressed consumers.
