Dubai may set up Shariah-compliant exim bank

The bank is seen providing financing to companies involved in trade while helping them to reduce their risks and gain market access.

Reuters/Dubai

Dubai’s government will consider establishing the world’s first fully Shariah-compliant export-import bank to promote the emirate’s foreign trade, the Department of Economic Development said yesterday.

The bank would provide financing to companies involved in trade while helping them to reduce their risks and gain market access, the department said in a statement without giving details of the proposed institution’s structure or financing.

Noor Investment Group, which is affiliated to Investment Corp of Dubai, the emirate’s flagship investment vehicle, will advise on the project, the department added. It did not give a time frame.

Dubai is a top trans-shipment centre for trade in the region and wants to become a leading global centre for Islamic finance.

Islamic trade finance remains a tiny part of global banking business, but it is gradually attracting interest among banks and asset managers because of the rapid growth of trade in predominantly Muslim areas such as the Gulf and southeast Asia.

Last month the Export-Import Bank of Malaysia said it had issued what it called the world’s first US dollar-denominated Islamic bond issue from an export-import bank; the $300mn, five-year sukuk attracted $3.2bn of investor orders.