IIFM and the Bankers Association for Finance & Trade, an international financial services association have signed a memorandum of understanding jointly to create a master risk participation agreement to support Islamic trade finance.
The joint IIFM-BAFT Islamic Risk Participation Agreement will incorporate the practical considerations for funded and unfunded risk participations in trade assets within a Shari’ah-compliant framework.
“IIFM is at the forefront of developing standardized Islamic financial contracts and product confirmations which lead to unified and transparent market practices and contributes to the sustainable growth of the industry,” said IIFM chairman Khalid Hamad. “Earlier cooperation with certain other international organizations and now BAFT will no doubt contribute in increasing the trade finance business on a Shari’ah-compliant basis.”
“Trade finance is the backbone of the global financial system with import and exports in trillions of U.S. dollars but the share of Shari’ah-compliant transactions is relatively small,” said IIFM CEO Ijlal Alvi. “Trade finance presents huge potential for Islamic finance and our joint efforts with BAFT will benefit all stakeholders.”