Yes. A bond is a loan that pays a fixed or floating return on the principal, and the High Board of Religious Affairs (Din İşleri Yüksek Kurulu) treats the coupon on government bonds (tahvil), treasury bills (hazine bonosu) and Eurobonds as interest (faiz), which makes buying them for the return impermissible. The size of the coupon, the issuer's credit quality and the currency do not change the ruling. The halal replacement in Turkey is the lease certificate (kira sertifikası), which the Treasury issues in lira, dollars and gold and which pays rent on an asset rather than interest on a loan. This guide sets out the rulings, the exceptions people ask about, the tax treatment and how to make the switch.
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What a bond is, in fiqh terms
A tahvil is a debt security. The investor lends the face value to the issuer, the issuer promises to repay it at maturity and to pay a coupon in the meantime. The coupon is a return for the use of money over time, with no asset, service or risk-sharing in between, and that is the definition of riba in the classical sources. The Diyanet rulings on tahvil and bono apply this directly: the return is faiz, and acquiring the instrument in order to earn it is not permissible. The same reasoning applies to a Eurobond, which is simply a Turkish bond denominated in a foreign currency and sold abroad.
The point that confuses people is the issuer. Lending to the Turkish state is not different in fiqh from lending to a company or a person: a loan that earns a return is riba regardless of who borrows. The Treasury itself recognises this by issuing a separate instrument for investors who will not take interest, and our Turkish Treasury provider page lists both families of instrument. Our kâr payı versus interest explainer covers the general principle.
The Diyanet rulings in brief
The High Board's published rulings on debt securities are short and consistent. On tahvil, the Board states that the fixed return paid on bonds is interest and that buying bonds for that return is not permissible. On hazine bonosu, the same position applies, since a treasury bill is a short-dated bond sold at a discount, and the discount is the interest. On Eurobonds, the Board again identifies the coupon as faiz. The Board also addresses what to do with interest you have already received: it should not be consumed and should be given away to the needy without expecting reward, a principle covered in our Diyanet fatwas on banking and money guide.
There is one argument some readers raise: that in a high-inflation environment a bond coupon merely preserves the purchasing power of the principal, so it is compensation rather than gain. The Board has not accepted this. Inflation may be considered when a debt is repaid between private parties, but a fixed return contracted in advance on a loan remains interest, and the Board's rulings on bank deposits and on bonds say so explicitly. The honest answer is that a Muslim investor who needs inflation protection should look at gold, equities and lease certificates, not at the coupon.
What the kira sertifikası is and why it passes
A lease certificate (kira sertifikası) is Turkey's sukuk. The issuer, through an asset leasing company (varlık kiralama şirketi), transfers assets such as public buildings into a special vehicle; investors buy certificates representing shares in those assets; the issuer leases the assets back and pays rent to the certificate holders; at maturity the assets are bought back and the principal returned. The return is rent on a real asset, not interest on a loan, which is why participation banks and their advisory boards accept it and why the Treasury runs a separate issuance calendar for it. Our kira sertifikası explainer walks through the structure.
The Treasury (Hazine ve Maliye Bakanlığı) runs regular issuances in Turkish lira, in US dollars and in gold, each announced on its website with the issue date, maturity and rent rate. Lira certificates are the direct substitute for a tahvil, dollar certificates for a Eurobond, and gold certificates for an investor who wants to hold physical gold through the Treasury, which our Treasury gold lease certificate guide covers. Private sector lease certificates are also issued by participation banks and corporates, with the same structure and higher rent for higher issuer risk.
| Instrument | What you own | What you receive | Diyanet position |
|---|---|---|---|
| Tahvil (government bond) | A loan to the Treasury | Fixed or floating interest coupon | Not permissible |
| Hazine bonosu (treasury bill) | A short-dated loan bought at a discount | The discount, which is interest | Not permissible |
| Eurobond | A loan in foreign currency | Interest coupon in that currency | Not permissible |
| Kira sertifikası (TL, USD or gold) | A share in leased assets | Rent on those assets, principal at maturity | Permissible |
| Özel sektör kira sertifikası | A share in a company's leased assets | Rent, with issuer risk | Permissible, subject to the issuer's screen |
Where bonds hide: funds, pensions and bank products
Few Turkish investors buy a tahvil directly. Bonds arrive inside other products, and that is where the care is needed. Conventional debt instrument funds (borçlanma araçları fonu) on TEFAS hold bonds and bills by definition. Balanced and variable funds often hold a bond sleeve. Standard BES pension plans default into bond-heavy funds unless you choose participation funds. Conventional money market funds hold bills and repo. And a conventional bank's structured deposit or capital-protected product is usually a bond with an option attached.
- On TEFAS, filter for funds with katılım in the name or in the participation category; they may not hold bonds or bills.
- In BES and OKS, check that every fund in the plan is a participation fund, not just the one you chose at the start.
- For cash, use a participation money market fund such as the one reviewed in our KLU fund guide or a daily participation account, not a conventional liquid fund.
- If you hold a bond fund already, sell it, give away the portion of the gain that reflects interest and move the capital to a lease certificate fund.
A conventional bank selling a bond-based product to a participation customer is not doing anything illegal, so the filter has to be yours. Our halal investing hub lists the participation products in each category so you can match a replacement to each conventional holding.
Tax: the same rules for bonds and lease certificates
Income from Turkish bonds, bills and lease certificates held by individuals is taxed by withholding under Temporary Article 67 of the Income Tax Law, as set out in the Revenue Administration's guide on securities income. The withholding is deducted by the bank or broker and is final for resident individuals, so there is no annual declaration. The rate is set by Presidential Decree and has changed several times in recent years, so check the current figure with your bank before you buy. The important point for this guide is that the Treasury's lease certificates are taxed on the same footing as its bonds, so moving from one to the other does not carry a tax penalty.
Eurobonds and foreign-currency lease certificates are treated differently from lira instruments under the same article, and the capital gain on a Eurobond sold before maturity can fall under declaration rules rather than withholding. Our participation banking taxes guide covers the deposit side, and anyone holding dollar instruments of any kind should take advice on the declaration rules in the year of sale.
How to replace a bond holding, step by step
Start by listing every holding that pays a fixed return on money: direct bonds, bond funds, bond sleeves in balanced funds, BES funds, conventional liquid funds and structured deposits. For each, identify the participation substitute: a Treasury lira lease certificate or lease certificate fund for a tahvil fund, a dollar lease certificate for a Eurobond, a participation money market fund for a liquid fund, and a katılım BES fund for a conventional pension fund. Our how to buy kira sertifikaları guide explains the primary market through participation banks and the secondary market through brokers.
Then deal with the interest you have already earned. The Board's position is that it should be given away without the intention of reward, and most scholars say the purified amount is the interest received, not the whole investment. Keep a record of the amounts and the charities, because the calculation can be revisited at zakat time. Finally, set a rule for the future: no instrument enters the portfolio unless you can name the asset or business that generates its return.
Our verdict on bonds for a Muslim investor in Turkey
Bonds, bills and Eurobonds are not permissible, because their return is interest on a loan, and the Diyanet rulings say so plainly. The good news is that Turkey has an established sovereign sukuk programme, so the replacement is not theoretical: the Treasury issues lira, dollar and gold lease certificates on a regular calendar, participation banks sell them in the primary market, and participation funds hold them for investors who want diversification. The cost of switching is small, the tax treatment is the same, and the structure is accepted by the advisory boards of every participation bank. Use lease certificates and lease certificate funds for the fixed income part of a halal portfolio, keep cash in a participation fund or account, and leave the tahvil to others. Facts checked against kurul.diyanet.gov.tr, hmb.gov.tr and gib.gov.tr on 17 September 2026.
Frequently asked questions
Are Turkish government bonds haram?
Yes. The High Board of Religious Affairs treats the return on tahvil and hazine bonosu as interest and rules that buying them for that return is not permissible. The fact that the borrower is the state does not change the ruling, because a loan at a fixed return is riba whoever borrows. The Treasury's lease certificates are the permissible alternative and are issued on a regular calendar.
Is a Eurobond halal if I hold it to maturity?
No. A Eurobond is a loan in foreign currency with an interest coupon, and holding it to maturity rather than trading it does not change what the coupon is. The Board's ruling identifies the coupon as faiz. If you want dollar exposure from the Turkish state, the Treasury issues dollar-denominated lease certificates, which pay rent on leased assets instead.
What is the difference between a kira sertifikası and a bond?
A bond is a loan: you lend money and are paid interest for it. A lease certificate is a share in assets that are leased back to the issuer: you own part of the asset and are paid rent. The cash flows can look similar, but the contract is a sale and lease rather than a loan, which is why participation bank advisory boards accept it and reject bonds.
Is a bond fund inside my BES plan haram?
A conventional bond fund holds interest-bearing instruments and is not permissible, and standard BES plans often default into such funds. You can switch the plan's fund allocation to participation funds without losing the state contribution. Check each fund in the plan, not just the first one chosen, and ask the pension company to confirm that the allocation is entirely participation.
What do I do with interest I have already received from bonds?
The Board's guidance is that interest income should not be consumed and should be given away to those in need without expecting reward. Most scholars apply this to the interest received, not to the principal, so calculate the coupons and discount you earned and give that amount away. Keep a record, then move the principal into lease certificates or a participation fund.
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Do lease certificates pay more or less tax than bonds?
The same. Both are taxed by withholding under Temporary Article 67 of the Income Tax Law for resident individuals, at a rate set by Presidential Decree that your bank or broker deducts at source. Switching from a Treasury bond to a Treasury lease certificate therefore carries no tax penalty. Foreign-currency instruments have their own rules, so take advice if you hold dollar certificates.
