INTEREST-FREE INCOME BONDS - IS IT PERMISSIBLE TO SIGN UP?
INTEREST-FREE INCOME BONDS - IS IT PERMISSIBLE TO SIGN UP ? By : Mufti Ebrahim Desai 📨 QUESTION: Assalamu Alaykum, Income bonds are offered as interest free, is it permissible for me to sign up? 📧 ANSWER: In the Name of Allah, the Most Gracious, the Most Merciful. As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh. An income bond or adjustment bond is a type of debt security in which only the face value of the bond is promised to be paid to the bondholder, with any coupon payments (interest) paid only if the issuing company has enough earnings to pay for the coupon payment. This is different from a traditional corporate bond or government bond in which the issuer makes regular interest payments to bondholders and upon maturity, repays the face value of the bond. Bondholders expect to receive the stated coupon payments periodically and are exposed to a risk of default in the event that the company has solvency problems and is unable to fulfil its debt obligations. How...