Service Ijarah Bonds

Definition of "Service Ijarah Bonds"

A proposed Islamic financial instrument for meeting budgetary deficit of government. The government can issue bonds to its employees in lieu of paying them in cash for their services. The employees could avail of certain services provided by the government at cheaper rates. For example, a person holding the bonds will be able to get admission for his dependents or anybody he wants at a prime educational institution by paying concessional fees. These bonds can also be made trade able on the market. They will have a maturity date. They can be made usable for specific services like education, health and for specific institutions. But they can be made all-purpose bonds. The price of these bonds will vary according to the supply and demand for various services and maturity date of the bond.