Islamic Trade Financing

Islamic trade finance is trade finance performed in a way that complies with Shariah laws. The idea of a set of rules for Islamic finance was introduced around 1950-70 as a solution and a response to the increasing influence of western economies. In Islamic trade finance, trade transactions can be financed either on credit or on a participatory basis. Topics covered in this course includes:

• Introduction to Shariah principles in Islamic trade financing
  • Key aspects of trade financing: Payment facilitation, financing, risk mitigation and documentation
  • Shariah principles in Islamic trade financing: Musharaka, murabaha and wakala
• Basis for Islamic trade financing
  • Credit basis involving the delay of the price or delivery of the purchased commodities.
  • Participatory finance in the form of participation of the financier in the profits and losses brought in to resell the financed goods or put them into an income-generating production process.
• Different credit techniques to comply with Shariah principles
• Standardization in international trade within an Islamic economy
• Legal aspects of trade finance structuring and documentation
• Managing risks in Islamic trade financing
• Shariah issues in Islamic trade financing: Islamic trust receipts, Islamic shipping guarantee, Islamic accepted bills.