I feel humbled in completing the full cycle last week on explaining Islamic finance after authoring the first article in March 2018. It has been a journey of discoveries for me as I conducted research and recalled my own practical experiences while working on all types of transactions before writing on any new topic in this series. Also, readers sent questions which had not crossed my mind. I am thankful to them for broadening my horizon.

I am so grateful to Almighty Allah to have introduced me to Islamic finance after having worked at the forefront of conventional banking for a couple of decades — and considering it to be the best way in the modern world to manage money and finance.

Then I must pay tribute to my teacher and mentor, the late Dr Hussain Hamed Hassan, the legend and the father of Islamic banking. He painstakingly taught me and the team I had assembled when I founded Dar Al Sharia way back in 2007 and was always available for guidance no matter which corner of the world he may have been in. May Allah rest his soul in peace and grant him paradise. Aameen.

A big ‘thank you’ to IFN management to have given me the opportunity to commence the series. I commend the patience of the editorial team for waiting for my last-minute posts. Not only that, but also in rushing the revised article although it was past the deadline and yet having it accepted — and published. I also missed out on many occasions and they kept their cool. My sincere apologies to the IFN team for causing any inconvenience.

The title of the series was carefully chosen as ‘Back to basics’ and the reason behind it was to provide readers with a pure and unadulterated perspective on the parameters, principles and applications of the Islamic financing and investment system in the midst of many products and practices offered in the guise of being Shariah compliant. I tried to avoid controversies as far as possible but at times was drawn into them, and was forced to blurt my mind out for the sake of keeping the record straight.

I have never claimed to be a scholar and will never do so, since I believe I am still a student who has simply wet his toes in the ocean of Islamic finance. I have a lot to learn and always seek from Almighty God to bestow the right knowledge on me. Whatever I have conveyed through the ‘Back to basics’ series is based on my own educative journey in the Islamic finance universe and my hands-on practical experience while developing over four dozen Islamic banking products and completing scores of capital market, asset management, Takaful and other types of transactions.

Now, to resolve the mystery of the new topic. It is the ever-popular Sukuk or Islamic bonds. From the beginning of the series, I was repeatedly asked by some readers to provide a detailed explanatory write-up on Sukuk but at that time, it would have been out of place to do so.

Let me explain. Consider Sukuk as the body of a car which needs to sit on a chassis in order to complete the shape. If the body is built ahead of the chassis, it will just be lying there with no use unless the chassis is developed. Similarly, the idea was to first complete the explanation of all Islamic sale and investment contracts before writing on Sukuk which will then complete the picture.

Elaborating further, the Sukuk must have an underlying Shariah nominate contract without which there can be no issuance. For example, the Sukuk can only be issued based on one of the sale contracts or an investment contract, or a hybrid combination of both. But there can be no Sukuk issued without a Shariah nominate contract. Hence, it was considered important to first provide a full explanation of all contracts (the chassis) before commencing to write on Sukuk (the body).

It is not only for Sukuk. The Takaful (Islamic insurance) and the asset and wealth management sides (fund or trust) must also be based on either of the contracts, or a combination thereof. These topics shall be attended to after the discussion on Sukuk is done and dusted with.

Let me test your patience for one more week. I will commence the explanation on Sukuk from the next article insha Allah. Bye for now.

The purpose of this educative series and the article is not to hurt any religious or commercial sentiments either consciously or even unwittingly.

Sohail Zubairi is an Islamic finance specialist and AAOIFI-certified Shariah advisor and auditor. He can be contacted at [email protected]

Next week: Discussion to commence on Sukuk.