Islamic sukuk is basically a legal instrument or deed. Sukuk in general can be explained as a shariah compliant i.e. bond.

To make it more simplify, it means ownership of an asset or its instrument. The claim that made in sukuk is not just to claim for cash flow but it is claimed for the ownership. May be understood as a shariah compliant? Bond? In its simplest form sukuk represents ownership of an asset or its usufruct. The claim embodied in sukuk is not simply a claim to cash flow but an ownership claim. Sukuk is completely different from conventional bond and is latter on proceed over interest. Sukuk word is originated from the word SUK, this word was used in middle age as a paper work obligation used for trade and commercial purpose. However, the present scenario of sukuk is totally different from the sukuk that was used in middle age. Now a day it was used as a conventional concept of securitization, which means the underlying assets is transferred to a large number of investor through certificates showing relevant value of the assets. The market of sukuk in the year 2001 was noted to be less than $500 million but as the time passes and the people gaining interest in the Islamic bonds and the result of it in 2007 it increases to $60 billion. But later on, a sudden fall is seen in Islamic bonds in the year 2008 because of this an additional investment by the Kuwait firm of $100m are invested. This led to an investor that whether they can claim for the assets or not? Is the sukuk is proven to be fruitful against the conventional bonds because it contains the tangible assets in them. slowly and gradually, the financial market of Kuwait raising from inflation. Their money is getting value and the market condition started growing. In the year 2012, it is noted that the market of Kuwait in terms of sukuk reached on peak and the people was feeling so secure and the new investor come up with their investment plan. Now to talk about the type of bonds that are being issued to the people are Salam securities, in this seller sell or undertake to supply commodities to the buyer assure them that they will get the advanced price in future or return. But the seller sells them on the current price to the buyer. Ijarah bond, it is an leasing agreement between lessee and the leaser. Lessee called as mustajir and the leaser called as ujrah. Next is Istisnaa bonds, it is a project in which the payment are done in advance to the supplier and the labor by an Islamic banks. Once the project completed, the advances are repaid from the revenue derives from the project. Musharaka bonds, in this bonds people who have invested or buy these bonds will not be getting the fixed return rather they may get the variable return. This is called musharaka bonds.

Many authors said that sukuk is just like conventional bonds but many said that these are considered as conventional bonds. So here is the differentiation between both: Conventional bonds Conventional bonds dont provide Sukuk the But in case of sukuk, a partial ownership are given to the investor. On the other hand, this shows the share of assets.

ownership to their buyer. It shows the share of debentures.

Its value is based on the issuer credit While in this the underlying value of assets are worthiness. based on market value.

In conventional bonds, investor gets the In this interest is haram and on the place of regular scheduled interest for their bonds. interest, share of profit are given.

In case of conventional bonds, investors are While in case of sukuk, if the cost of assets hardly affected by the cost of the assets. They affected, it will also affect the share of profit for continue to get the scheduled interest without the investor i.e. higher the cost, lower will be the any deduction. profit and vice versa.

In Islam the main objective of sukuk is to make capital gains as fixed interest bond prices rise when variable market interest rates fall. So basically the Islamic bonds are used to exploit the interest rates which is completely unrelated to any value of assets. In Islamic finance, purchaser of sukuk or funding raised through bonds should be properly hypothecated and should be clearly specified on the agreement that who is the purchase and who is the seller. In the words of Jamaldeen, he said that sukuk may be issued for existing assets and can be issued for the assets that will be exist in future. Sukuk is basically a equity tangible share, which is purchased by the people and people are awarded with the profit derived from the assets that they have purchased. On the other hand If interest is being given to them it will not be accepted as it is against the shariah. One more thing that is added to this report is that, if the profit that has been expected from the assets are not derived and company faces the loss , then the people whos holding the bond in that assets are liable to share losses as well. it is not possible that the holder of asstes should get the whole principle amount that they have invested for assets. They have to share loss as well. it is also been seen that, when the maturity period comes, issuer buy them back.

From the view of Faize Raei, international issue that means in Kuwait, sukuk are as similar to conventional bonds when it is being talk in terms of rating, issuance and redemption procedures, coupon payments etc. For example: in the case of Kuwait, here sukuk and

conventional bonds have similar durations, and then the correlation is still close to zero. Moving on to the next author Debashish Dey, he said that with the nature of asset backed securitization three perquisites are required: investor should show a desire to take risk which is associated with true sale of assets. Secondly, companies who are seeking for finance must their desire to sell assets and last legal framework should be involved in respect with bankruptcy and assets selling laws in many jurisdiction in the GCC. He concluded that the outlook for the sukuk market in Kuwait remains positive, indicating that the issued or the amount that has been estimated to invest in the Kuwait market are $50bn. This will help Kuwait market in respect with investor, bankers, originators and lawyers.