The Al Hilal Bank has eventually used the blockchain technology for selling and settling a part of its $500 million five-year Sukuk that’s issued in two months ago. The transaction that was about $1 million and the Sukuk was sold to a private investor, confirmed by a spokesperson to Reuters.
Sukuks are the Sharia-compliant bonds of Islam, or financial certificates, which allow investment in Islamic countries without breaking any religious laws. They are quite similar to the bonds issued by the government. However, Investment is not allowed in the Islamic law as bonds yield the interest.
The CEO of Abu Dhabi Bank, Alex Coelho, said that it was the first bank to offer a “Smart Blockchain Islamic Sukuk.” He further added that smart contracts would make the transaction even safer and more secure.
The digital transformation team of the bank partnered with UAE-based FinTech company ‘Jibrel Network,’ and was supported by ADGM (Abu Dhabi Global Market) Fintech Regulatory Lab.
Just like other investment product settlement trials, such as one that recently conducted in Singapore, the Blockchain is being tested as well as utilized in the hopes that it will reduce the administrative overheads and enhance the record-keeping and efficiencies for the financial transactions. The Al Hilal Bank is just another example of the global penetration of blockchain technology, even in such products as the Sukuk, that has to be compliant with Islamic law.