AIRLINK 74.00 Decreased By ▼ -0.56 (-0.75%)
BOP 5.02 Decreased By ▼ -0.04 (-0.79%)
CNERGY 4.42 Decreased By ▼ -0.04 (-0.9%)
DFML 39.20 Decreased By ▼ -0.53 (-1.33%)
DGKC 86.09 Decreased By ▼ -1.46 (-1.67%)
FCCL 21.65 Decreased By ▼ -0.28 (-1.28%)
FFBL 34.01 Decreased By ▼ -0.58 (-1.68%)
FFL 9.92 Increased By ▲ 0.17 (1.74%)
GGL 10.56 Increased By ▲ 0.07 (0.67%)
HBL 113.89 Increased By ▲ 0.10 (0.09%)
HUBC 135.84 Decreased By ▼ -0.68 (-0.5%)
HUMNL 11.90 Increased By ▲ 1.00 (9.17%)
KEL 4.84 Increased By ▲ 0.17 (3.64%)
KOSM 4.53 Decreased By ▼ -0.11 (-2.37%)
MLCF 38.27 Decreased By ▼ -0.19 (-0.49%)
OGDC 134.85 Decreased By ▼ -1.29 (-0.95%)
PAEL 26.35 Decreased By ▼ -0.26 (-0.98%)
PIAA 20.80 Decreased By ▼ -1.69 (-7.51%)
PIBTL 6.68 Increased By ▲ 0.01 (0.15%)
PPL 123.00 Increased By ▲ 0.71 (0.58%)
PRL 26.69 Decreased By ▼ -0.28 (-1.04%)
PTC 14.33 Increased By ▲ 0.42 (3.02%)
SEARL 59.12 Decreased By ▼ -0.75 (-1.25%)
SNGP 69.50 Decreased By ▼ -0.56 (-0.8%)
SSGC 10.33 Decreased By ▼ -0.02 (-0.19%)
TELE 8.50 Decreased By ▼ -0.04 (-0.47%)
TPLP 11.23 Decreased By ▼ -0.11 (-0.97%)
TRG 64.85 Decreased By ▼ -1.15 (-1.74%)
UNITY 26.25 Decreased By ▼ -0.08 (-0.3%)
WTL 1.34 Decreased By ▼ -0.01 (-0.74%)
BR100 7,851 Increased By 26.3 (0.34%)
BR30 25,337 Decreased By -69.2 (-0.27%)
KSE100 75,207 Increased By 122.8 (0.16%)
KSE30 24,143 Increased By 49.1 (0.2%)
Print Print 2023-02-18

Maiden auction: Govt borrows Rs5.5bn via Ijarah Sukuk

  • Sukuk is also approved by the Shariah Advisory Committee of the SBP to ensure its adherence to Islamic law
Published February 18, 2023

KARACHI: The federal government has borrowed some Rs 5.5 billion through the auction for first ever 1-year tenure Ijarah Sukuk.

Recently, the Ministry of Finance announced the auction for first-ever 1-year tenure sovereign domestic Ijarah Sukuk and the first auction was held on Feb 16, conducted by State Bank of Pakistan (SBP). The Sukuk is also approved by the Shariah Advisory Committee of the SBP to ensure its adherence to Islamic law.

According to State Bank, overall received bids amounted to Rs 10.663 billion for the sale of Variable Rental Rate (VRR) Government of Pakistan Ijara Sukuk (GIS) 1-Year, GIS 3-Year and GIS 5-Year. This included Rs 10.622 billion worth bids for the sale of GIS 1-year, Rs 28.10 million for 3-year and Rs 13.5 million for 5-year Sukuk.

Cumulatively, the federal government raised Rs 5.801 billion against the sale of VRR Ijara Sukuk. Some Rs 5.515 billion were borrowed through the sale of GIS 1-year against the initial target Rs 30 billion set by the ministry of finance. Similarly, Rs 28.1 million were borrowed against the sale of 3-year and Rs 3 million of 5-year Ijara Sukuk. In addition, some Rs 255 million non-competitive bids were also accepted in the auction for GIS VRR.

Ijarah Sukuk transaction structure unveiled

The SBP also conducted an auction for the GIS Fixed Rental Rate (FRR), for which Rs 3 million bids were received for the sale of 1-year and 3-year GIFS FRR. However, only Rs 0.5 million were accepted against GIS 1-year. The return of the Sukuk is 17.5 p.a.

Ahmed Ali Siddique, Head of Shariah Compliance Meezan Bank, said for the first time Pakistan is offering a 1-year sovereign Ijarah Sukuk in the domestic market with 6-month rental payment and it will be another step towards conversion of government financing to Islamic modes and to provide the financial sector and investors an alternative avenue to invest in Shariah-compliant Sukuk of shorter tenure.

He said the Sukuk is being offered to all banks, mutual funds, pension funds, corporate sector and individual investors looking for Shariah compliant attractive returns. The Sukuk can also attract High Net worth local and international Shariah minded investors and also those who are looking to shift from interest based National Saving schemes offered by CDNS.

Ahmed hoped that the launch of one-year GIS can also provide the government an option to discontinue 12 months T-bills after the Federal Shariat Court decision for elimination of Riba from the financial sector and Finance Minister and SBP Governor announcement to shift to Islamic banking system in the next 5 years.

Comments

Comments are closed.

Umair Usman Feb 18, 2023 02:33pm
common mans money hone to waste.... private bank will soon be defaulting on cash payout to its customers
thumb_up Recommended (0)
Tamil Tulukan Speaks Feb 18, 2023 04:34pm
"The return of the Sukuk is 17.5 p.a.". Isn't this interest (Riba)?
thumb_up Recommended (0)
Umair Usman Feb 18, 2023 07:52pm
@Tamil Tulukan Speaks, yes its riba but the question is where is the govt going to earn this much money?
thumb_up Recommended (0)
Truthisbitter813 Feb 20, 2023 09:39am
@Tamil Tulukan Speaks, It's not fixed, so no.
thumb_up Recommended (0)