An Islamic bank’s customer has recently been awarded facilities in relation to a large developmental project the customer has won in a tender

Fatawa Question

An Islamic bank’s customer has recently been awarded facilities in relation to a large developmental project the customer has won in a tender. The facilities include letters of credit (LCs) and letters of guarantee (LGs). In view of the large size of the bank’s liability under the LCs and LGs, the bank’s management is now considering to share up to 50 % of the risk exposure under such LCs and LGs with other banks. As per initial input, several Islamic and conventional banks in the market would be willing to contribute for such risk participation. Can an Islamic bank share part of its risk under LCs and LGs with other Islamic banks as well as conventional banks ? It is to be noted that the Islamic bank would like to issue the LCs and LGs in its own name.

Fatwa

Click hereto view more

Publisher

Islamic Finance News

Publication Date

2014-05-28

Country of Publication

Malaysia

Main Subjects

Economics & Business Administration
Islamic Studies

Data Type

Fatawa

Language

English

Record ID

BIM-783538

• APA
• MLA
• AMA