A Proposal for Transferring Non-Shariah Compliant Incomes Generated from Participation-based Investment Funds to Social Aid Activities

Nurullah Tırman; İbrahim Keçeci

Article Details

A Proposal for Transferring Non-Shariah Compliant Incomes Generated from Participation-based Investment Funds to Social Aid Activities

Authors:

Nurullah Tırman | İbrahim Keçeci

Publisher:

Afyon Kocatepe University

Main Topics:

İslam Finansı | İslam Hukuku | Katılım Bankacılığı

Journal:

Kocatepe İslami İlimler Dergisi Vol.6 Issue Özel Sayı, pp.303-319

Document Type:

Article

Publication Date:

10/2023

Document Language:

Turkish

Document ID (Org No.):

2001301091

pISSN:

2757-8399

Keywords:

Abstract:

 Participation-based investment funds are the investment funds that be constituted portfolio of assets through monetary and capital market instruments which are compliant with the principles of participation finance. These funds include lease certificates sukuk, real estate certificates, participation accounts, equities, precious metals etc. One of the most important aspects regarding fund assets is that the equities to be included in the portfolios of participation-based investment funds must be in compliance with Shariah principles. Thus, the main activity areas of the company to be included in the portfolio must be suitable from Shariah perspective. Because of the exceptional circumstances arising from regulations or necessity to sustain activities, companies with legitimate main activity areas but a possessing a limited amount of non-compliant income or debt up to a certain threshold have been approved by the Shariah scholars for trading of their equities. However, its not permissible in Shariah for a Muslim to earn income through illegitimate means, it has been stated that the non-permissible earnings derived from prohibited sources owned by a company must be purified. The view, firstly discussed by a group of Shariah Scholars on a global scale in 1987, became more systematic with the development of various standards from the 1990s onwards. Subsequently, global Islamic stock market indices began to establish. In Türkiye side, Bizim Menkul Degerler established an Islamic participation index in 2008. TKBB Shariah Board published standards for companies that could be included in the participation index in 2020. Thereafter the calculation and management of participation indices were transferred to Borsa İstanbul with a decision taken in 2021. Thus, TKBB Shariah Board which sets the standards for the participation index listing Shariah-compliant equities in Turkey has expressed their opinions on the necessity of purifying non-permissible earnings derived from equity investments. Investors, who are trading equities within the framework of participation finance principles, can purify their non-permissible earnings based on the ratios that announced to the public via Public Disclosure Platform, in accordance with the standards published by TKBB Shariah Board. Even standards published for purification, participation-based investment funds do not purify the non-permissible earnings arising from the equities which they trade; or provide information to investors about the ratioamount of non-permissible earnings that must be purified on behalf of the investors. In this study, a proposal has been developed for purification of non-permissible income which generated from participation-based investment funds, with consideration for customer preferences, and their allocation towards social aid activities. In this context, firstly, opinions regarding the necessity of purifying non-permissible earnings generated in participation-based funds have been discussed in this study. After that the outlook of participation-based investment funds market in Turkiye was examined, aiming to determine the potential amount of non-permissible earnings generated in these funds. The proposal regard to the subject also take part in the last section. As a result, it has been determined that the assets of participation-based investment funds have become one of the fastest-growing capital market instruments among Islamic finance assets in Turkiye. Indeed, the assets of participation-based investment funds have reached 299.2 billion TL by June 2023, growing by 193 compared to the same month of the previous year and by 75 since the beginning of 2023. The size of the equity shares, which accounted to 8 of the fund assets, has reached 23 billion TL. In this regard, the amount of non-permissible earnings, that need to be purified from the equities included in participation-based investment fund portfolios, has been calculated as 371.6 million TL as of the beginning of 2023. Considering this amount, it is believed that the non-permissible earnings generated in participation-based investment funds could be more efficiently utilized if they were aggregated into specific social aid funds such as earthquake funds, aid funds, or disaster relief funds rather than being handled through individual actions. Moreover, it is also considered that this could have a positive impact on the public budget concerning social aid expenditures. When examining global practices related to the purification of Islamic investment funds; it is observed that in some countries, fund managers just give to inform investors about the amount that needs to be purified, and leave the purification process to the initiative of the investors. In some other countries, the non-permissible earnings portion is purified by fund managers, and remain fund revenues are transferred to investors.

 Katılım-esaslı yatırım fonları; kira sertifikaları sukuk, gayrimenkul sertifikaları, katılım hesapları, pay senetleri, altın, kıymetli madenler vb. gibi fıkhî çerçevede belirlenen katılım finans esaslarına uyumlu para ve sermaye piyasası araçları üzerinden portföy varlığı oluşturulan fonlardır. Fon varlıklarına ilişkin en önemli hususlardan birisi, katılım-esaslı yatırım fonlarının portföylerine dâhil edecekleri pay senetlerinin fıkhî kaidelere uyumlu olmasıdır. Bu bağlamda, pay senedi portföye dâhil edilecek şirketin esas faaliyet alanının, fıkhî açıdan uygun olması gerekmektedir. Belirlenen standartlar çerçevesinde, esas faaliyet alanı meşru olan ancak mevzuat açısından veveya faaliyetlerini devam ettirme zorunluluğundan kaynaklanan istisnai durumlar nedeniyle belirli bir eşiğe kadar faaliyet dışı mahzurlu geliri olan şirketlerin de pay senedinin alınıp-satılmasına fukaha tarafından uygunluk verilmiştir. Küresel boyutta ilk olarak 1987 yılında bir grup fıkıh âlimi tarafından tartışılan bu görüş, 1990lı yıllardan itibaren çeşitli standartlar geliştirilerek daha sistematik hale getirilmiş, akabinde küresel düzeyde İslami pay piyasası endeksleri oluşturulmaya başlanmıştır. 2008 yılında da Bizim Menkul Değerler tarafından Türkiyede katılım endeksi kurulmuştur. TKBB Danışma Kurulu tarafından 2020 yılında katılım endeksine dâhil edilebilecek şirketler için standartlar yayımlanmış, müteakiben 2021 yılında alınan karar ile birlikte, katılım endekslerinin hesaplanması ve yönetimi Borsa İstanbula devredilmiştir. Nitekim Türkiyede fıkhî uyumlu pay senetlerinin listelendiği katılım endeksine ilişkin standartları belirleyen TKBB Danışma Kurulu tarafından da pay senedi yatırımlarından elde edilen mahzurlu kazançların arındırılmasının gerektiğine ilişkin görüş beyan edilmiştir. Bu bağlamda, katılım finans esasları çerçevesinde pay senedi alım-satımı yapan yatırımcılar da TKBB Danışma Kurulu tarafından yayımlanan standartlar doğrultusunda, Kamuyu Aydınlatma Platformu aracılığıyla kamuya açıklanan oranlar üzerinden mahzurlu kazançlarını arındırabilmektedir. Her ne kadar pay senetlerinin arındırılmasına yönelik bir standart oluşturulmuş olsa da katılım-esaslı yatırım fonları, alım-satımını yaptıkları pay senetlerinden doğan mahzurlu gelirleri, yatırımcılar adına arındırmamakta veya yatırımcılara arındırılması gereken oranmahzurlu gelir tutarı hakkında bilgi sunmamaktadır. Bu çalışmada, katılım-esaslı yatırım fonlarında oluşan mahzurlu gelirlerin, müşteri tercihine binaen arındırılarak sosyal yardım faaliyetlerine aktarılmasına ilişkin bir öneri geliştirilmiştir. Bu bakımdan, çalışmada ilk olarak katılım-esaslı yatırım fonlarında oluşan mahzurlu gelirlerin arındırılmasının gerekliliğine ilişkin görüşler ele alınmıştır. Akabinde, Türkiyede katılım-esaslı yatırım fonları piyasası incelenerek katılım-esaslı yatırım fonlarında oluşan mahzurlu gelirlerin potansiyel tutarı saptanmaya çalışılmış ve öneri sunumu gerçekleştirilmiştir. İncelemeler sonucunda; katılım-esaslı yatırım fonlarının varlıklarının, Türkiyedeki katılım finans varlıkları arasında en hızlı büyüyen sermaye piyasası ürünlerinden biri haline geldiği görülmüştür. Nitekim katılım-esaslı yatırım fonlarının varlıkları, Haziran 2023 itibarıyla, bir önceki yılın aynı ayına göre 193, 2023 yılı başına göre ise 75 büyüyerek 299,2 milyar TLye ulaşmıştır. Fon varlıkları içerisinde 8 paya sahip olan hisse senetlerinin büyüklüğü ise 23 milyar TLye ulaşmıştır. Buna göre, 2023 yılbaşı itibarıyla, katılım-esaslı yatırım fonlarının portföylerinde yer alan hisse senetlerinden arındırılması gereken mahzurlu gelirlerin tutarı 371,6 milyon TL olarak hesaplanmıştır. Bu tutar dikkate alındığında, katılım-esaslı yatırım fonlarında oluşan mahzurlu gelirler, münferit hareketlerden ziyade belirli bir havuzda toplandığı takdirde deprem fonu, yardım fonu veya Afet İmar Fonu gibi çeşitli yardım fonlarına aktarılmasının daha verimli olabileceği düşünülmektedir. Ayrıca arındırılması gereken miktarın belirli bir havuzda toplanmasının, sosyal yardım harcamalarına ilişkin kamu bütçesini olumlu yönde etkileyeceği değerlendirilmektedir. İslami fonların arındırılmasına ilişkin dünyadaki uygulamalara bakıldığında; bazı ülkelerde fon yöneticileri tarafından sadece arındırılması gereken miktar yatırımcıya bildirilip arındırma işlemi yatırımcı inisiyatifine bırakılırken, bazı ülkelerde ise mahzurlu kısım fon yöneticileri tarafından arındırılarak fon gelirleri yatırımcıya aktarılmaktadır. Çalışmada, fon yöneticileri tarafından gerçekleştirilecek mahzurlu gelirlerin arındırılması işlemi yatırımcı tercihine bırakılarak arındırma işlemlerinin fon yöneticileri tarafından yapılması önerilmiştir. Bu bakımdan, Türkiyede oluşturulması düşünülen sistem, küresel örneklerden farklılaşmaktadır.

 Participation-based investment funds are the investment funds that be constituted portfolio of assets through monetary and capital market instruments which are compliant with the principles of participation finance. These funds include lease certificates sukuk, real estate certificates, participation accounts, equities, precious metals etc. One of the most important aspects regarding fund assets is that the equities to be included in the portfolios of participation-based investment funds must be in compliance with Shariah principles. Thus, the main activity areas of the company to be included in the portfolio must be suitable from Shariah perspective. Because of the exceptional circumstances arising from regulations or necessity to sustain activities, companies with legitimate main activity areas but a possessing a limited amount of non-compliant income or debt up to a certain threshold have been approved by the Shariah scholars for trading of their equities. However, its not permissible in Shariah for a Muslim to earn income through illegitimate means, it has been stated that the non-permissible earnings derived from prohibited sources owned by a company must be purified. The view, firstly discussed by a group of Shariah Scholars on a global scale in 1987, became more systematic with the development of various standards from the 1990s onwards. Subsequently, global Islamic stock market indices began to establish. In Türkiye side, Bizim Menkul Degerler established an Islamic participation index in 2008. TKBB Shariah Board published standards for companies that could be included in the participation index in 2020. Thereafter the calculation and management of participation indices were transferred to Borsa İstanbul with a decision taken in 2021. Thus, TKBB Shariah Board which sets the standards for the participation index listing Shariah-compliant equities in Turkey has expressed their opinions on the necessity of purifying non-permissible earnings derived from equity investments. Investors, who are trading equities within the framework of participation finance principles, can purify their non-permissible earnings based on the ratios that announced to the public via Public Disclosure Platform, in accordance with the standards published by TKBB Shariah Board. Even standards published for purification, participation-based investment funds do not purify the non-permissible earnings arising from the equities which they trade; or provide information to investors about the ratioamount of non-permissible earnings that must be purified on behalf of the investors. In this study, a proposal has been developed for purification of non-permissible income which generated from participation-based investment funds, with consideration for customer preferences, and their allocation towards social aid activities. In this context, firstly, opinions regarding the necessity of purifying non-permissible earnings generated in participation-based funds have been discussed in this study. After that the outlook of participation-based investment funds market in Turkiye was examined, aiming to determine the potential amount of non-permissible earnings generated in these funds. The proposal regard to the subject also take part in the last section. As a result, it has been determined that the assets of participation-based investment funds have become one of the fastest-growing capital market instruments among Islamic finance assets in Turkiye. Indeed, the assets of participation-based investment funds have reached 299.2 billion TL by June 2023, growing by 193 compared to the same month of the previous year and by 75 since the beginning of 2023. The size of the equity shares, which accounted to 8 of the fund assets, has reached 23 billion TL. In this regard, the amount of non-permissible earnings, that need to be purified from the equities included in participation-based investment fund portfolios, has been calculated as 371.6 million TL as of the beginning of 2023. Considering this amount, it is believed that the non-permissible earnings generated in participation-based investment funds could be more efficiently utilized if they were aggregated into specific social aid funds such as earthquake funds, aid funds, or disaster relief funds rather than being handled through individual actions. Moreover, it is also considered that this could have a positive impact on the public budget concerning social aid expenditures. When examining global practices related to the purification of Islamic investment funds; it is observed that in some countries, fund managers just give to inform investors about the amount that needs to be purified, and leave the purification process to the initiative of the investors. In some other countries, the non-permissible earnings portion is purified by fund managers, and remain fund revenues are transferred to investors.

 Participation-based investment funds are the investment funds that be constituted portfolio of assets through monetary and capital market instruments which are compliant with the principles of participation finance. These funds include lease certificates sukuk, real estate certificates, participation accounts, equities, precious metals etc. One of the most important aspects regarding fund assets is that the equities to be included in the portfolios of participation-based investment funds must be in compliance with Shariah principles. Thus, the main activity areas of the company to be included in the portfolio must be suitable from Shariah perspective. Because of the exceptional circumstances arising from regulations or necessity to sustain activities, companies with legitimate main activity areas but a possessing a limited amount of non-compliant income or debt up to a certain threshold have been approved by the Shariah scholars for trading of their equities. However, its not permissible in Shariah for a Muslim to earn income through illegitimate means, it has been stated that the non-permissible earnings derived from prohibited sources owned by a company must be purified. The view, firstly discussed by a group of Shariah Scholars on a global scale in 1987, became more systematic with the development of various standards from the 1990s onwards. Subsequently, global Islamic stock market indices began to establish. In Türkiye side, Bizim Menkul Degerler established an Islamic participation index in 2008. TKBB Shariah Board published standards for companies that could be included in the participation index in 2020. Thereafter the calculation and management of participation indices were transferred to Borsa İstanbul with a decision taken in 2021. Thus, TKBB Shariah Board which sets the standards for the participation index listing Shariah-compliant equities in Turkey has expressed their opinions on the necessity of purifying non-permissible earnings derived from equity investments. Investors, who are trading equities within the framework of participation finance principles, can purify their non-permissible earnings based on the ratios that announced to the public via Public Disclosure Platform, in accordance with the standards published by TKBB Shariah Board. Even standards published for purification, participation-based investment funds do not purify the non-permissible earnings arising from the equities which they trade; or provide information to investors about the ratioamount of non-permissible earnings that must be purified on behalf of the investors. In this study, a proposal has been developed for purification of non-permissible income which generated from participation-based investment funds, with consideration for customer preferences, and their allocation towards social aid activities. In this context, firstly, opinions regarding the necessity of purifying non-permissible earnings generated in participation-based funds have been discussed in this study. After that the outlook of participation-based investment funds market in Turkiye was examined, aiming to determine the potential amount of non-permissible earnings generated in these funds. The proposal regard to the subject also take part in the last section. As a result, it has been determined that the assets of participation-based investment funds have become one of the fastest-growing capital market instruments among Islamic finance assets in Turkiye. Indeed, the assets of participation-based investment funds have reached 299.2 billion TL by June 2023, growing by 193 compared to the same month of the previous year and by 75 since the beginning of 2023. The size of the equity shares, which accounted to 8 of the fund assets, has reached 23 billion TL. In this regard, the amount of non-permissible earnings, that need to be purified from the equities included in participation-based investment fund portfolios, has been calculated as 371.6 million TL as of the beginning of 2023. Considering this amount, it is believed that the non-permissible earnings generated in participation-based investment funds could be more efficiently utilized if they were aggregated into specific social aid funds such as earthquake funds, aid funds, or disaster relief funds rather than being handled through individual actions. Moreover, it is also considered that this could have a positive impact on the public budget concerning social aid expenditures. When examining global practices related to the purification of Islamic investment funds; it is observed that in some countries, fund managers just give to inform investors about the amount that needs to be purified, and leave the purification process to the initiative of the investors. In some other countries, the non-permissible earnings portion is purified by fund managers, and remain fund revenues are transferred to investors.

Article Details

A Proposal for Transferring Non-Shariah Compliant Incomes Generated from Participation-based Investment Funds to Social Aid Activities

Authors:

Nurullah Tırman | İbrahim Keçeci

Publisher:

Afyon Kocatepe University

Main Topics:

İslam Finansı | İslam Hukuku | Katılım Bankacılığı

Journal:

Kocatepe İslami İlimler Dergisi Vol.6 Issue Özel Sayı, pp.303-319

Document Type:

Article

Publication Date:

10/2023

Document Language:

Turkish

Document ID (Org No.):

2001301091

pISSN:

2757-8399

Non-Shariah Compliant Income

Islamic Investment Funds

Participation-based Investment Funds

Equities

Purification

Social Aid.Mahzurlu Gelir

Katılım-esaslı Yatırım Fonları

Pay Senetleri

Arındırma

Sosyal Yardım.

Issues

Article Details

Authors: Nurullah Tırman | İbrahim Keçeci

Publisher: Afyon Kocatepe University

Main Topics: İslam Finansı | İslam Hukuku | Katılım Bankacılığı

Journal: Kocatepe İslami İlimler Dergisi Vol.6 Issue Özel Sayı, pp.303-319

Document Type: Article

Publication Date: 10/2023

Document Language: Turkish

Document ID (Org No.): 2001301091

pISSN: 2757-8399

Issues

Authors:

Nurullah Tırman | İbrahim Keçeci

Publisher:

Afyon Kocatepe University

Main Topics:

İslam Finansı | İslam Hukuku | Katılım Bankacılığı

Journal:

Kocatepe İslami İlimler Dergisi Vol.6 Issue Özel Sayı, pp.303-319

Document Type:

Article

Publication Date:

10/2023

Document Language:

Turkish

Document ID (Org No.):

2001301091

pISSN:

2757-8399