What is Sukuk? What does sukuk, which was brought up in the fund investigation, mean?

While discussions were continuing within the scope of the fund investigation, Minister of Commerce Ömer Bolat's announcement that his family's savings of 37.8 million liras were in the SUKUK (lease certificate) account brought the question of what this financial instrument was to the agenda again. So, what is Sukuk? What does sukuk, which was brought up in the fund investigation, mean?

WHAT DOES SUKUK MEAN?

The word "Sukuk" is of Arabic origin and refers to an investment and financing instrument used in the Islamic financial system. In sukuk, instead of providing a return on interest as in traditional bonds, the basis of the investment is the asset, right, rental income or income obtained from commercial activities. In this respect, sukuk is considered among the investment instruments that comply with Islamic finance principles and is also defined as an "interest-free bond" in daily use.

The Fiqh Academy affiliated with the Organization of Islamic Cooperation deemed the use of sukuk legitimate in February 1988, and the Accounting and Auditing Institution of Islamic Financial Institutions (AAOIFI) published the "Investment Sukuk Sharia Standard No. 17" in 2003.

HOW DOES SUKUK WORK?

With a simple example:

Let's say a company needs financing.

A real estate or other asset owned by the company is subject to financing through a certain structure.

Asset Lease Company (ALC) issues sukuk/lease certificates.

Investors fund the system by purchasing these certificates.

Investors' return consists of the income obtained from the underlying asset or right.

WHAT IS THE DIFFERENCE BETWEEN SUKUK AND BONDS?

Bond: It is basically based on debt relationship and the investor earns interest income.