The Islamic Republic of Iran was the first country to introduce Sukuk to the financial market, an economic expert said.
Speaking to Eghtisad (economy) Radio, Mohammad Sajjad Siahkarzadeh noted that while it is said that Malaysia was the first country to issue Sukuk in 1997, the Navab Expressway project in Tehran had been carried out in the same year using Sukuk bonds.
He said Iran devised the operational mechanisms for issuing Sukuks in 1994 and introduced the mechanisms in the second Islamic Banking conference in Tehran in that year.
Siahkarzadeh said companies finance their operations using different financial tools such as selling stocks, bonds, etc, adding that issuing Islamic bonds (Sukuk) is a means for funding projects.
“Issuing Sukuk bonds is also used for absorbing liquidity. It is a good means for the equitable distribution of wealth,” he stated.
Sukuk is the Arabic name for financial certificates, but commonly refers to the Islamic equivalent of bonds. Since fixed income, interest bearing bonds are not permissible in Islam, Sukuk securities are structured to comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest.
According to economic experts, the Sukuk market is not only the fastest growing part of Islamic finance, but one of the fastest growing segments in the global financial market.