UAE-based Al Hilal Bank executed a blockchain-powered resale and settlement of an Islamic Sukuk, also known as Sharia compliant bonds.
A sukuk is an Islamic financial certificate, similar to a bond in Western finance that complies with Sharia, Islamic religious law.
The transaction was executed in a secondary market deal in Al Hilal Bank's $500 million Senior Sukuk maturing in September 2023. Islamic Sukuk are said to be one of the fastest growing asset classes with $97.9 billion worth of Sukuks issued in 2017, up 50 percent from 2016.
The creation of the digitized Islamic Sukuks, dubbed Smart Sukuks, were a result of the partnership between Al Hilal Bank Digital Transformation team and UAE incubated blockchain startup Jibrel. This innovation was supported by Abu Dhabi Global Markets' (ADGM) FinTech platforms.
Smart Sukuks is expected to provide transactional efficiencies and significantly reduce the high overheads associated with issuing and settling Islamic Sukuks. The use of smart contracts will also enable the enforcement of Sharia compliance.
Al Hilal Bank is looking to transform the Sukuk market by embracing blockchain technology and integrating it into their infrastructure. It will provide Islamic financiers with the necessary tools to facilitate Islamic agreements with the same speed, volume and efficiency experienced in conventional finance.
Earlier in May, Germany's TE-FOOD had partnered with UK-based firm HALAL TRAIL to implement a blockchain-based food traceability solution designed for the halal food chain aimed to serve over 2 billion Muslims across the world.
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