DISCOURSE ON THE CONCEPT AND VEHICLES OF BONDS IN ISLAMIC LAW

Sukuk, often referred to as Islamic bonds, represent a unique and innovative financial
instrument within the realm of Islamic finance. Originating from the principles of
Islamic law, Sukuk offers a distinct alternative to conventional bonds by adhering to
Islamic principles that prohibits the payment or receipt of interest (Riba). Instead of
interest-bearing debt, Sukuk are structured as investment certificates, granting investors
a share in the ownership of tangible assets or services. This adherence to Islamic
principles ensures that Sukuk are compatible with Islamic ethical and legal standards,
attracting a diverse range of investors seeking financial instruments aligned with their
religious beliefs. As Sukuk continue to gain prominence in global financial markets,
they contribute to the development of more inclusive and diverse investment options,
catering to both Islamic and non-Islamic investors alike. Sukuk provide an alternative
means for raising capital that aligns with Islamic finance principles. Sukuk can resemble
conventional bonds by some of its features, but it is technically neither debt nor equity.
It is complex to understand the exact nature of Sukuk and differentiating them from
bonds. This research Article made an extensive conceptual discourse on Sukuk and the
vehicles of bonds under Islamic law, thereafter making findings that Sukuk is an
instrument of the Islamic Capital Markets. Before investing in any Sukuk, Muslim
investors should ensure that there is strict compliance with the sharia principles
governing commercial transactions in Islamic Law