Page "Sukuk" Paragraph 18

Sukuk are widely regarded as controversial due to their perceived purpose of evading the restrictions on Riba.

Conservative scholars do not believe that this is effective, citing the fact that a Sakk ( Islamic bond ) effectively requires payment for the time-value of money.

This can be regarded as the fundamental test of interest.

Sukuk offer investors fixed return on their investments which is also similar in appearance to interest in that the investor's return is not necessarily dependent on the risks of that particular venture.

However, banks that issue Sukuk are investing in assets — not currency.

The return on such assets takes the form of rent, and is evenly spread over the rental period.

The productivity of the asset forms the basis of the fixed income stream and the return on investment.

Given that there is an asset underlying the value of the certificate, there may be, depending on the value of the asset, more security for the investors involved, accounting for the additional appeal of Sukuk as a method of financing for investors.