The Islamic bonds market: possibilities and challenges

Resource mobilization through Islamic bonds is not only possible; it has proven to be practical through the implementation of several successful projects. However, bond issuing in Islamic finance presents unique challenges, because conventional bonds rely on riba and usury. Because bonds are an important part of the conventional economy, Islamic equivalents have been developed. Available products include Mudarabah bonds, musharakah bonds, Ijarah bonds, istisna‘ bonds, salam bonds and murabahah bonds. Further diversification is needed to meet consumer demand, but developing bonds, while still abiding by the rules of Shari‘a, is a difficult and complex undertaking.