ICIEC and Al Baraka Islamic Bank Collaborate to Boost Shariah-Compliant Trade Finance

Strategic Insights -

The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and Al Baraka Islamic Bank BSC Bahrain have signed a Documentary Credit Insurance Policy (DCIP) aimed at strengthening support for Shariah-compliant trade finance. This collaboration enables greater security and confidence in the international trade ecosystem by providing insurance coverage for the confirmation of Letters of Credit (LCs) issued by Al Baraka Islamic Bank for the import and export of eligible Shariah-compliant goods and services.

Key Takeaways:

  • The ICIEC and Al Baraka Islamic Bank signed a Documentary Credit Insurance Policy (DCIP) to boost Shariah-compliant trade finance, enhancing support for Islamic banks' ability to expand trade finance operations with reduced exposure to commercial and political risks.
  • The policy provides insurance coverage for the confirmation of Letters of Credit (LCs) issued by Al Baraka Islamic Bank for the import and export of eligible Shariah-compliant goods and services, aiming to mitigate payment risks associated with cross-border trade.
  • The partnership aims to promote sustainable growth in ICIEC's member states by supporting Shariah-compliant trade finance through the DCIP.
  • Dr. Khalafalla, CEO of ICIEC, stated that the partnership demonstrates the power of multilateral cooperation in achieving shared development goals, while Dr. Salem, CEO of Al Baraka Islamic Bank, noted that the DCIP empowers the bank to extend Shariah-compliant trade finance to clients, stimulating sustainable economic growth across member states.
  • The DCIP complements ICIEC's broader mandate to promote economic resilience, financial inclusion, and private sector development in member countries.

Statistics:

  • ICIEC has insured more than USD 121 billion in trade and investment cumulatively.
  • ICIEC has a "AAA" rating and maintains an 'Aa3' insurance financial strength credit rating from Moody's, and an 'AA-' long-term Issuer Credit and Financial Strength Rating from S&P.
  • ICIEC's activities are directed to several sectors, including energy, manufacturing, infrastructure, healthcare, and agriculture.
  • Al Baraka Islamic Bank has been active in the Islamic banking sector within Bahrain since its establishment in 1984 and has played a significant role in promoting the Islamic finance industry.

Sources:

  • The Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC).
  • Contify.com. (Original press release date: July 16, 2017)