Al Hilal Bank is the first Islamic bank in the world to leverage Blockchain technology for the resale and settlement of an Islamic Sukuk, as per an article posted by Cointelegraph on 26th November.
A Sukuk is an Islamic financial certificate, similar to a bond in Western finance, also known as “sharia-compliant” bonds, structured in such a way as to generate returns to investors without infringing Islamic law.
“We are proud to be the first bank to launch a ‘Smart Blockchain Islamic Sukuk’; once again the bank has demonstrated that it has the capabilities of leading in the competitive market of Islamic banking. The advantages of using smart contracts range from safer transactions with robust Shariah compliance to the unlocking of new opportunities,” Al Hilal Bank’s CEO, Alex Coelho, said.
The Islamic bank used the distributed ledger technology to sell and settle in the secondary market a small portion of its $500 million five-year Sukuk, issued in September.
“Al Hilal Bank is aiming to transform the Sukuk market through embracing blockchain and integrating it into their infrastructure, paving the way for innovative digitized Islamic Sukuk.” a bank spokeswoman said.
And also added, “The size of the deal was $1 million, sold by Al Hilal to a private investor.” In this transaction, Jibrel Network, a Switzerland-headquartered fintech company with offices in Dubai, was involved.
Leveraging the smart contracts protocol for transforming the traditional Sukuk market to digital will improve transactional efficiencies while reducing the bloated overheads associated with issuing and settling Islamic Sukuks.
Link to the original news article can be found here.
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