Istisna Bonds

Definition of "Istisna Bonds"

A proposed financial instrument for raising funds by government. The government can issue these bonds to the public for selling certain assets in the future, (on the principle of bai al-istisna‘) like houses or cars, etc. The bonds will be issued with a mark down on the current market price of the assets or in times of inflation with a guarantee that the current market price will not be increased. The bonds will be non-negotiable. However, the bond holders will be able to get back their money before due date at par value.