Asset-Backed vs. Asset-Based Sukuk

Sukuk must represent proportionate ownership in a real underlying asset (tangible assets, usufruct, or services). Where the obligor guarantees to buy back the underlying assets at face value regardless of market value (as is common in ijarah sukuk with purchase undertakings at par), the economic reality mirrors a conventional bond. This constitutes a form of fictitious ownership with a guaranteed return not tied to asset performance, which approaches the prohibition of riba. True asset-backed sukuk — where investors bear real asset risk and return — are permissible.

Sukuk must satisfy the condition of genuine risk and return sharing. A structure that eliminates all asset risk while guaranteeing redemption at par effectively creates a risk-free return, mimicking riba. The use of put options at par price also violates this principle.