Bai‘ mu’ajjal-based tradeable securities

Definition of "Bai‘ mu’ajjal-based tradeable securities"

A proposed financial instrument for government finance. The government can issue these securities for any purchases, prices for which have to be paid over a period of time. The seller of the product would add his profit and other costs in the price. The securities would have an amortization schedule. Each instalment would be paid by the government on its due date. The holder of the security would surrender the relevant coupon for claiming the payment. The securities can be made transferable or tradeable at the stock exchange. The discounted price of the securities would be equal to the face value minus any collection costs at the transferee’s end and any income foregone on tied funds. The essential conditions are: (i) the transferor cannot re-purchase the securities directly or indirectly; and (ii) in case the actual payment is not made, the holder of the security should have a right of recourse on the original transferor.