The Islamic Banking fraternity was shaken by the view of the prominent Shariah scholar, Sheikh Muhammad Taqi Usmani, that up to 85% of the Sukuks issued up to now may not have been fully Shariah-compliant.

This has forced scholars and practitioners to go back to the drawing board and re-look at their existing Sukuk structures, and the Accounting and Auditing Organisation of Islamic Financial Institutions (AAOIFI) quickly issued guidelines on Sukuk to ease the market worries. Depsite this, the debate is still on-going on how “Islamic” are the current structures of Sukuks and what can be done to mitigate or improve this.

Of course, the Ijarah-based structure of Sukuks remains viable as a Shariah-compliant structure, based on the prominent scholar’s view. Read more below on these issues:

• Booming Islamic Bond market embroiled in debate over Shariah compliance (International Herald Tribune)
• Islamic bond decree delivers rude shock to Sukuk market (Gulf-news article)
• Fatally Flawed Bonds (Bloomberg article) 
• AAOIFI Ruling on Sukuk (PDF file)
• Islamic bond market ‘wrecked’ by critical remarks (Arabian Business.com) 

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