Sukuk set to be law before next Budget

Sovereign Islamic Bonds soon to be a reality

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Sovereign Islamic bonds could be issued before the next Budget thanks to ongoing government support, Junaid Bhatti, director of Islamic Finance consultancy Ballencrieff House, has claimed.Mr Bhatti said he was pleased Islamic finance continued to receive the support of Alistair Darling and said the chancellor’s Budget laid the foundations for the UK government to issue a sovereign sukuk.He said: “Several measures have been announced, which will help with the implementation of this project. The main changes will be the introduction of modifications to the stamp duty and taxation regulations, which will ensure that the Sukuk, or Islamic bond, is given the same tax treatment as conventional bonds.”

Mr Bhatti said the sector could flourish in light of global credit turmoil as the ethical structure of Islamic finance ensured lenders looked to its responsibilities before issuing loans.

He said: “Capitalist economies are suffering severe liquidity shortages due to the global credit crunch some of which is due to irresponsible lending and the gambling of customers’ money.

“Islamic finance is the perfect antidote to this, because it forces banks to act more responsibly and with greater prudence. It does this by balancing the risks between banks and their customers, and through an insistence that all transactions must be supported by tangible assets.”

The government said it remained committed to examining the issuing of Sukuks and would take legal powers to facilitate any potential future issuance in the Finance Bill 2008. The responses to the recently closed public consultation will be made public later in the summer.


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