Islamic bonds are expected to soon incorporate blockchain technology or Sukuk to widen their appeal. According to industry experts, the socially-conscious finance can contribute largely towards mobilizing large pools of assets across the Muslim community. The experts believe that it can also impact the Islamic finance industry.
Currently, the Islamic financial firms are adding social elements such as the sustainable and environmentally-friendly practices to ensure that the appeal of the Islamic bonds widens beyond their religiously-minded customers located in Southeast Asia and the Gulf. According to the Director of Research at the International Sharia Research Academy for Islamic Finance (ISRA), Bouheraoua, the Islamic Development Bank based in Saudi is now working on Islamic endowments linked to sukuk and is called waqf.
Bouheraoua was speaking at the industry conference in Bahrain hosted by the Accounting and Auditing Organization for Islamic Financial Institutions. ISRA’s consulting arm has been appointed by the multilateral bank to give advice on $200 million worth sukuk.
In the blockchain technology-based sukuk linked to waqf the proceeds are diverted towards social projects and the excess yield is reinvested in the assets of waqf. The proposal of Islamic bonds will follow a deal by the Indonesian government launched at the start of this month with waqf-linked sukuk. As per reports, waqf has been in existence since centuries but its management has been very poor because they hold huge portfolios of commercial businesses and real estate worth $1trillion globally, reported Reuters.
Blossom Finance, an Indonesian firm is planning a sukuk based on blockchain in the coming days for funding the microfinance projects in the country with Muslim-majority, said Khalid Howladar, the chief strategy officer of the company. According to Money Control, this deal will be smaller as compared to the other blockchain-based sukuk but will help to keep the issuance costs low and attract a large number of retail investors.
According to S&P Global Ratings, smart contract and blockchain technology protocols can bring massive change in the global sukuk world. In his statement, Mohamed Damak, the Global head of Islamic finance at the S&P Global Ratings said that blockchain can enhance transparency in cash flows and underlying assets as well as enhance the decision making ability of the investors as they will be exposed to greater information supply, reported The Edge Markets
The post Islamic Bonds To Incorporate Blockchain Technology-Based Sukuk To Widen Appeal appeared first on OWLT Market.
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