Trade Financing

Islamic banking windows may finance foreign trade as per Shariah following import-export and foreign currency policy of the country. Foreign trade may be divided into 3 major categories:


  • Import business
  • Different services related to foreign trade
  • Export Business

Import business

Import business is predominantly conducted through Letter of Credit. A letter of Credit (LC) is a written undertaking given by the Bank to a seller / exporter to the effect that the Bank will pay the seller a certain amount stipulated in the LC, provided that the seller complies with the terms and conditions of the LC. The Bank issues the LC mainly under the following contractual concepts:

  • Wakala/ Agency contract
  • Murabaha / Bai-Muajjal
  • Musharaka


Export business

To accomplish export process / order as per the terms and conditions of the letter of credit (L/C) and the agreement executed between the seller and buyer, an exporter needs financial and other banking facilities on urgent basis. So, it is one of the important functions of a bank to provide investment and banking facilities to the exporter at different stages of export business


An exporter needs financial facilities at two stages of export process – before and after shipment. Hence, financial facilities to export sector complying Shari’ah principles may be classified as:

  • Pre-shipment Finance
  • Post-shipment Finance