Trade Services

2. Shared Risk: In economic transactions, risk sharing is promoted by the Islamic banking. When two or more parties share the risk following the principles of Islamic banking the burden of the risk will be divided and reduced for the parties. 

3. Riba: It can be regarded as the prohibition of interest.

4. Gharar: According to the Islamic finance principles, Islamic banks are not allowed to participate in ambiguous and uncertain transactions. According to Islamic rules, both parties should have proper control over the business amd complete information should be shared with both parties.

5. No Investment in Prohibited Industries: The industries that are harmful to society or have a threat to the social responsibilities are prohibited in Islam. 
They include and not limited to Alcohol, Pork, Drug, etc.....

According to the Islamic finance principles, you are not allowed to invest in such industries. You cannot participate in mutual funds that will help these industries to flourish.

Principles of Islamic finance guide us to invest in an industry that will help us to achieve financial and social objectives that have been determined by Islam.  Islamic finance principles have been designed to make an economy successful, so it is a way of saving our money from being invested in a wrong path.

DIB's Trade Finance Division offers a comprehensive choice of Trade Product Service Deliverability for its valuable Trade Based Cliental makes its unique by offering full package of Trade Products & Services with 100% sharia compliant solution.

The Centralised Trade Processing Centre in Dubai focuses on processing of transactions through the divisions' competent, certified & skilled Trade staff ensuring mitigation of risk profile. Quick turn around time to facilatate faster completion of transactions for customer satisfaction is paramount to DIB.

Our Web & E-trade channels are available for electronic interface while this information is aimed at enabling clients to understand us more and to interact with us for a mutually beneficial trade relationship. 

Content in the web pages is for information purpose only and with a view to serve you better; please note that they are not intended to be a substitute for Trade, Regulatory, Legal or any other professional advice.

2- Murabaha LC 

Foreign & Wakala Murabaha are Sharia based products & services provided to the customers under Documentary Credits in Murabaha cases, the bank hereinafter referred to as “DIB” shall purchase the goods or commodities from a third party under Documentary Credits based on Customer’s promise and sell them to the customer after getting their possession. 

In case of Wakala Murabaha the Bank being the Principal will enter into an Agency Agreement with the customer (Agent) and appoint him as its agent to purchase the commodities or acquire the services on behalf of the Bank

*Documents required under Murabaha LC:
A –Proforma invoice or purchase order 
B –Promise to purchase and/ or Master Investment Offer (A)
C –Local Murabaha undertaking (in case of local delivery)
D –Murabaha Sales Contract or Schedule C Part 2 Acceptance

3-Wakala Murabaha (Open Account)

Wakala Murabaha refer to sharia based products and services used when the customer needs to purchase goods on behalf of principal directly from supplier Agent (Wakeel) requests the principal (DIB) to appoint them as an “undisclosed Agent” in order to purchase the goods in their name on behalf of the principal by negotiating with the supplier. 

*Parties in Wakala are as below:
The Ultimate Buyer (The customer/ the agent/ Wakeel) , The Intermediary Buyer/ Seller (the Bank/ Principal/ Muwakel) and The Ultimate Seller (The Supplier). 

*Documents required under Wakala Murabaha (Open Account) 
A-Master Murabaha Agreement (MMA) 
B-Offer and Acceptance (Schedule A&B) 
C-Customer Request 
D-Invoice 
E-Transport Document 
F-Signed Acceptance of the Offer for the transaction

Banking day: a day during which a bank is regularly open at the place at which an act subject to these rules is to be performed. 

Complying presentation: a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice. 

Confirmation: a definite undertaking of the confirming bank, in addition to that of the issuing bank, to honour or negotiate a complying presentation.

Honour:
1. To pay at sight if the credit is available by sight payment 
2. To incur a deferred payment undertaking and pay at maturity if the credit is available by deferred payment. 
3. To accept a bill of exchange (“draft”) drawn by the beneficiary and pay at maturity if the credit is available by acceptance. 

Negotiation: the purchase by the nominated bank of drafts (drawn on bank other than the nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank. 

Nominated bank: the bank with which the credit is available or any bank in the case of a credit available with any bank. 

Shipping Guarantee (SG) / Delivery order (DO): is a formal financial obligations or undertakings in favour of third parties, issued by banks on behalf of customers, to facilitate their business dealings, The consignee and the Bank jointly undertake to indemnify the carrier against all liabilities relating to the delivery and undertake to surrender the bill of lading (BL) duly endorsed to the carrier on receipt of it.
Delivery Terms: EXW, FCA, CPT, CIP, DAT, DAP, DDP, FAS, FOB, CFR, CIF

B. Types Of Documentary Credit

1- Irrevocable LC: An irrevocable LC is the type of Letter Of Credit that can be cancelled or changed only with the consent of the beneficiary. Thus, the bank becomes dependent on the exporter and its bank.
2- Transferable LC: When a particular LC can be transferred by the main beneficiary to another secondary beneficiary, the LC is said to be transferable. However, the second beneficiary cannot further transfer the LC.
3- Standby LC: A standby LC is somewhere close to a bank guarantee since the bank makes payment only when the buyer (importer) fails to fulfil payment liabilities of the exporter.
4- Back to Back LC: In case of a back to back LC, a new LC is issued by the main beneficiary to the second beneficiary taking the original LC as security or guarantee. It is usually used for exporters or suppliers of goods.
5- Revolving LC: Single L/C that covers multiple-shipments over a long period. Instead of arranging a new L/C for each separate shipment, the buyer establishes a L/C that revolves either in value (a fixed amount is available which is replenished when exhausted) or in time.

C. Letter of Credit Cycle:

- The buyer and seller enter into a contract and agree that payment be made on the basis of Letter of Credit
- Buyer approaches DIB (issuing bank) to issue Letter of Credit in favour of the seller
- DIB issues Letter of Credit which is advised through its correspondent bank (advising bank) in the seller’s country
- Advising bank advises Letter of Credit to the seller 
- Upon receipt of the Letter of Credit, the seller prepares shipment and delivers documents to presenting bank
- Presenting bank dispatches documents to DIB for payment
- Upon receipt of complying presentation DIB pays the presenting bank as per letter of credit terms and conditions 
- DIB forwards the documents to the buyer, for further release of the goods

Dubai: (with effect from Monday, 23rd January,2023, Trade Finance Operations will be located at 9th floor, Dubai Islamic Bank Building, Al Nahda-1, Dubai - UAE)

• Syed Aleem Jaffery 
  Tel: (04) 493 2344 
  Mob: (050) 8549 070
  Fax: (04) 211 2319 
  Email :aleem.jaffery@dib.ae
• Mohammad Shahidulkarim
  Tel: (04) 493 2345 
  Mob: 052-4143-737
  Fax: (04)211 2319 
  Email: m.shahidulkarim@dib.ae
• Ashwaq Ahmed Alblooshi
  Tel: (04) 493 2360
  Fax: (04) 2112319
  Email: Ashwaq.Alblooshi@dib.ae

Abu Dhabi

• Ridwan Zamrik
  Tel: (02) 614 8520
  Mob: (050) 6220 087
  Fax: (02) 6325541
  Email: ridwan.zamrik@dib.ae
• Umir Ul Haq
  Tel: (02) 2023101
  Mob: (055) 4221494
  Fax: (02) 6325541
  Email: Umair.Haq@dib.ae

Sharjah

• Al Hassan Al Masri
  Tel: (06) 5071 206
  Mob: (052) 7806 676
  Fax: (04) 211 2319
  Email: AlHassan.AlMassry@dib.ae

Bank guarantees protect both parties in a contractual agreement from credit risk. 
Applicant means the party indicated in the guarantee as having its obligation under the underlying relationship supported by the guarantee. The applicant may or may not be the instructing party.

Beneficiary means the party in whose favour a guarantee is issued. 

Expiry means the expiry date or the expiry event or, if both are specified, the earlier of the two.

Expiry date means the date specified in the guarantee on or before which a presentation may be made.

Expiry event means an event which under the terms of the guarantee results in its expiry, whether immediately or within a specified time after the event occurs, for which purpose the event is deemed to occur only When a document specified in the guarantee as indicating the occurrence of the event is presented to the guarantor, or if no such document is specified in the guarantee, when the occurrence of the event becomes determinable from the guarantor's own records.

Guarantor means the party issuing a guarantee, and includes a party acting for its own account

B. Type of Guarantees:

1- Tender Bond (Bid Bond) is designed to prevent the seller from withdrawing his tender if the transaction has become unattractive to him by the time the contract is awarded. The beneficiary wishes to safeguard himself against the submission of frivolous or inadequately thought out tenders.
2- Performance Bond is intended to ensure that the goods are delivered or the service rendered in accordance with the terms of the contract and on time.
3- Advance Payment Guarantee is to ensure that an advance payment is used in accordance with the intentions of the contract concluded between the applicant and beneficiary. The purpose of these payments is to provide the supplier with the necessary funds for the purpose of materials and components, the transportation of machinery to the construction site, the hiring of labor or the making of other preparations for the performance of the contract.
4- Retention Money Guarantee is to ensure that applicant will continue to fulfill contract obligations after withdrawing final payment of the contract price from the beneficiary in advance, at the request of the construction contractor or supplier.
5- Financial Guarantee is to ensue and guarantee payments towards beneficiary on financial obligations of the applicant.
6- Maintenance Guarantee is a guarantee against defective workmanship or materials after completion of a project. 
It’s often to incorporate an obligation guaranteeing ‘efficient or successful operation’ or other obligations of like intent and purposes.

C. Letter of Guarantee Cycle:

- The customer requests for the letter of guarantee from the bank when the supplier asks for one or when there is uncertainty in customers’ ability to pay. 
- When the bank receives the request for the letter of guarantee, it must verify that the customer qualifies or not. The bank scrutinises the underlying transactions, past transaction records, and other relevant materials. It can ask the customer for any additional information and document if required.
- Before the issue of the letter of guarantee, the bank can make the modification on the request of the customer or the supplier. 
- After the delivery of goods to the customer, the supplier made the claim for the compensation from the guaranteeing bank within the validity period. 
- The bank notifies the customer of the request. 
- The bank will then examine the claim document and verify that they comply with the clauses of the letter of guarantee.
- After checking that everything is in order, the bank makes the payment to the supplier.

Principal: is the party entrusting the handling of a collection to a bank (Exporter, Seller, Remitter and Drawer of the Draft)

Remitting Bank: is the bank to which the principal has entrusted the handling of a collection (Exporter’s Bank handling the collection)

Collecting Bank: is any bank, other than the remitting bank, involved in processing the collection (Usually Buyer’s Bank) 

Presenting Bank: is the collecting bank making presentation to the drawee.

Drawee is the one to whom presentation is to be made in accordance with the collection instruction (Importer, Buyer, Payee)

Avalization: is the act of having the collecting bank guarantee payment at maturity in addition to drawee’s acceptance.

The exporter may avail the privilege of ensuring the payment of accepted draft by way of seeking the collecting bank to avalize the draft drawn under the collection. 
However the act of avalization is completely at the discretion of collecting bank to do so with an additional cost.

B. Type of Documentary Collection

Documents against Payment (D/P) 
Also known as «Sight Draft» or «Cash against Documents” (CAD)
The buyer must pay before the collecting bank releases the title documents, Time of Payment should be after shipment but before documents are released while the transfer of Goods will be after payment is made on sight. 

Documents against Acceptance (D/A) 
The buyer accepts a time draft, promising to pay for the goods at a future date and after acceptance, the title documents are released to the buyer in which time of payment will be on maturity of draft at a specified future date while transfer of Goods is before payment, but upon acceptance of draft.

Documents against payment (D/P) 
Under Murabaha/Wakala Finance:
DIB grants credit facility i.e. Murabaha facility to customers, Drawee has to request the bank in writing (signed by authorized signatory) to retire the Bill under Murabaha facility and need to submit Murabaha Sales Contract, Promise to Purchase, Schedule of offer & Acceptance, Promissory Note/Security Cheque duly signed by the authorized signatory as per the facility terms and conditions.  DIB will book Murabaha in the name of customer and effect the payment as per the remitting bank’s payment instructions appearing on the documents covering schedule. 

Documents against acceptance (D/A) 
Under Murabaha/Wakala Finance:
DIB grants credit facility i.e. Murabaha facility to customers, the drawee needs to request the bank in writing (signed by authorized signatory) to retire the Bill under Murabaha facility and need to submit Accepted signed draft, Murabaha Sales Contract, Promise to Purchase, Schedule of offer & Acceptance, Promissory Note/Security Cheque duly signed by the authorized signatory as per the facility terms and conditions. 
At maturity DIB will book Murabaha (pre agreed exchange and profit rate) in the name of customer and effect the payment as per the remitting bank’s payment instructions appearing on the documents covering schedule. 

C. Documentary Collection Cycle

The buyer and seller enter into a contract and agree that payment be made on the basis of documentary collection.

The exporter delivers the goods to the port or location where the merchandise will be exported from.

The documents are prepared and sent to the exporter›s bank, which is also known as the remitting bank.

The exporter's bank then forwards the documents to the importer’s bank, which is known as the collecting bank.

The importer›s or buyer›s bank receives the documents and notifies the buyer that documents have been received and requests payment from the buyer in exchange for the documents.

The buyer might pay the collecting bank on sight or agree to accept a time draft whereby the buyer will pay at a future date.

Once payment has been effected or the buyer has accepted the time draft, the bank releases the documents to the buyer.

The beneficiary has the right to either accept the advised documentary credit or reject which must be communicated to the advising bank by way of tendering the documents under the subject LC ( in case LC accepted ) or return the original LC to the DIB counter ( in case of refusal ). 

Any subsequent amendment received on the subject documentary credit from the issuing Bank /confirming bank /first advising bank will advised to the beneficiary as appropriate with a nominal charges. 

2. Handling, checking and routing of documents under export LC’s

The beneficiary can present the documents against the documentary credit in line with the option provided in the presentation letter (specimen available at DIB CSC counter) as follows:
DIB to check and certify the compliance of the documents or to revert to the beneficiary for discrepancy rectification or forward to the issuing/nominated /confirming bank on approval basis.
DIB will forward any presentation subject to all due diligence in place as per the internal policy.

3. Adding confirmation to export letters of credit.

Under the confirmed LC mechanism the Confirming Bank undertakes to honour the beneficiary’s presentation made against the subject documentary credit, provided all terms and conditions 

Of the credit are met. The risk of payment is assumed by the Confirming Bank along with the Issuing Bank, thereby providing more protection for the beneficiary. 

4. Transfer of Documentary Credit 

A documentary credit which is transferable in nature allows the beneficiary to transfer the full value of the credit or partial to a second beneficiary. The beneficiary can ask modification of master documentary credit while requesting for transfer for the following areas only (i.e. Amount, Expiry date, Shipment date, Insurance percentage, Presentation period) while all other terms and condition should remain the same as per original LC.

5. Granting Finance under Usance LC documents 

The beneficiary may request for post finance shipment for those bills accepted by the issuing /confirming bank subject to our internal approval. The required criteria will be as follows:
- The subject Documentary credit must be advised by DIB to the beneficiary 
- The credit must be available with DIB 
- The beneficiary must have such facility