Shari'a Compliance And Conventional Credit Structures: An Oxymoron?

Key Takeaways

• Shari'a is based on the principles of morality and fairness.
• Shari'a is not a codified body of law in all jurisdictions.
• Shari'a principles are guiding principles that are not always interpreted and applied in the same manner; thus, there are varying degrees of tolerance in Shari'a application.
• Credit is one of the more difficult asset classes for which to find Shari'a compliant solutions for; it requires more involvement from fund managers to find and apply workable strategies.

Conventional private credit investments and Shari'a principles are intrinsically at odds. Or are they? Interpretation and implementation are key to answering that question.