Shari’ah Appraisal of Mortgage Backed Sukuk Issued by Financial Institutions for House Financing in Naya Pakistan Housing Program: An Analytical Study

Abstract

This article is focused on conducting the Sharīʻah evaluation of mortgage backed sukuk by financial institutions in Pakistan under Naya Pakistan Housing Program for house financing. The financial product should strictly comply with the directives of Sharīʻah. This research work explores the structure of mortgage backed sukuk to spotlight the efficacy of mortgage backed Sukuk in house financing projects. Furthermore, this study discusses the Sharīʻah rulings with respect to the contract of Rahn. This endeavor is made to indicate Sharīʻah requirements pertaining to the validity of financial product of mortgage backed sukuk for house financing. This research article finds that the present government should adopt the financial product of mortgage backed sukuk for house financing under Naya Pakistan Housing Program because structure of mortgage backed sukuk is Sharīʻah compliant and Sharīʻah based. Pakistan is a candidate of Sharīʻah compliant housing finance because of constitutional responsibility of state of Pakistan under article 2-A and 227 of Constitution of Pakistan, 1973. Finally, suggestions have been put forward to issue mortgage backed securities for house financing project to the government of Pakistan.