Facilities provided by

Islamic banks
Islamic banks offer customized shariah compliant solutions to meet
domestic and international needs;

Features:

• letter of credit(opening, advising negotiation, confirmation)

• Currency Salam
• Pre export financing
• Import financing
• Syndicate trade financing
• Letter of Guarantee
Letter of credit under Islamic shariah
When used by Islamic bank
• Not treated as a guarantee
• Fee based banking service
• Issue LOC based on Wakalah, Murabaha, Musharka
• Involves two banks
1. Opening bank
2. Correspondent bank(to whom LC is sent)
 Letter of Credit Under Wakalah
• Bank act as an agent of importer
• Importer deposit full amount in bank
• Bank open LC
• Goods are shipped and stipulated documents by exporter
• Bank makes payment using client deposit
• Bank charges fee(ujrah) for this service.
 Letter of credit under Murabaha
• Bank opens letter of credit
• Shipment of goods and stipulated documents
• Bank makes payment to exporter using own funds
• Sells the imported goods to client
• Recover the cost and get a small commission.
 Letter of credit under Musharka
• Client deposit money with bank an agreed share of the imported
goods.
• Shipment of goods and submission of the stipulated documents
• Bank pay full amount to exporter using client’s deposit and bank’s
own fund.
• Goods are sold in market
• Profit is shared on agreed ratio between bank and importer.
 Pre-export finance
• Designed to provide financing to suppliers/exporters in advance.
• To produce manufacturing goods, commodities and agriculture
products.
• It is typically available through selected financial intermediaries
normally banks and export credit agencies.
• Bank will accept all mode of payments under the pre export financing
facility.
• Bank reserve the right to monitor transaction and may require
information from the intermediary in this regard.
 Currency Salam
• Salam is type of sale (ba’i) in which price is payed in advance
• Product will be deliver in future.
• Some jurists( furqaha) don’t allow salam in gold and silver currencies
or monitory units.
• Few jurists have considered it legitimate.
• Islamic banks use it as an alternative to bill discounting.
• Islamic shri’a prohibits the use or treatment of money as commodity.
• Gold , silver and other metallic money like coins of copper or nickel or
other metals can’t be used as a mean of money.
• Paper money can be used only in payment for goods and services ,
and it has no other uses.
• Exchange of currencies required the simultaneous payment on both
sides.
• According to Islam ,the price paid in salam should be in form of
money while the object of sale (Al -muslim -fihi) should not be a
monitory value.