This document discusses Sukuk, which are Islamic financial certificates similar to bonds. It defines Sukuk and explains that they are structured around the securitization of various asset types. The document then categorizes different types of Sukuk and discusses the Sukuk market in Pakistan, providing examples like WAPDA Sukuk. It notes challenges for the Pakistani Sukuk market like a lack of short and long-term instruments and secondary market liquidity. The conclusion recommends the government establish an institution to support the Sukuk market and calls for concerted efforts across stakeholders to further develop it.

1. Hassan Ahmed Khan
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Farrukh Abbasi
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2. Introduction
What is Sukuk?
• Word Sukuk is derived from Arabic word “Sakk”
meaning certificate.
• The design of sukuk is very similar to the process
of securitization of asset in conventional
markets where a wide range of asset types of
securitized.
• This asset types include mortgages, auto loans,
accounts receivables, credit card payoffs etc.

3. Issuance Procedure

4. Categories of Sukuk
• Istisna’a Sukuk
• Salam Sukuk
• Mudarabah Sukuk
• Musharkah Sukuk
• Ijarah Sukuk
• Sukuk Al Murabaha

5. Sukuk In Pakistan
• Concept of Sukuk is not very popular in
Pakistan.
• A lot of work should be done in this field, But
few examples are:-
1. WAPDA Sukuk for upraising Mangla Dam
2. Motorway Sukuk

6. Cont’
• Sukuk market in Pakistan has grown more than
ten fold during the period 2006-11.
• The slowdown in domestic sukuk market in 2008,
was a consequence of global financial turmoil.
• The sukuk instruments issued to date are
concentrated in the short to medium-term tenor
ranging between 3-7 years. Ijarah is the most
commonly used sukuk structure in Pakistan
followed by Diminishing Musharaka and
Musharaka.

7. Cont’
• Pakistan’s Islamic banking assets witnessed a
compounded annualised growth (CAGR) of 28
per cent during the past five years; presently
accounting for a market share of 7.3 per cent.

8. WAPDA Sukuk
• WAPDA’s financing requirement: PKR 8,000
million to (partially) fund the Mangla Dam Raising
Project
• Why WAPDA?
1. Strengthen its presence in the local financial
markets
2. Undertake a landmark transaction which will
catalyze the promotion of Islamic Financial
instruments and lead the way for other public
sector entities

10. Conclusion
• Sukuk market offers strong potential for raising
funds required for infrastructure development.
• To develop a vibrant sukuk market the country
needs to address challenges :-
1. Dearth of short-term and long-term instruments.
2. absence of secondary market for mitigating
liquidity risk.
3. identification of assets for sovereign sukuk and
disclosure of actual financing purpose.

11. Recommendations
• The government should consider establishing
an institution on the lines MIFC to provide
impetus to the sukuk market.
• Real progress towards the advancement of
sukuk market requires concerted efforts from
all stake holders including regulators,
corporate sector, Islamic financial institutions
and asset management companies.