Notice: Information on this website is currently being updated.
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 such as at pre-shipment stage, and at post-shipment stage. Hence, financial facilities to export sector may be classified as: Pre-shipment Finance and Post-shipment Finance. Financial assistance/ facilities complying Shari’ah Principles are provided at both the stages of export process.
Investment at Pre-Shipment stage as per Islami Shari’ah
An exporter needs various financial facilities till shipment of goods. Pre-shipment facilities are generally provided for the purpose of procuring raw-materials, processing the exportable goods i.e transportation & packaging, payment for wages & salary/bonus to employees, insurance premium, water, electricity, gas bills and freight of the ship etc. The Shari’ah complaint modes for Pre-shipment Finance.
Back to Back Letter of Credit
Bank extends Back to Back letter of credit (L/C) facility to exporters to procure/import raw-materials for producing/manufacturing exportable goods at pre-shipment stage under Bai-Muazzal mode. Initially, no financial facility from the Bank is required when the back to back L/C is opened. But if the exporter fails to pay the L/C value at maturity or on due date, the Bank provides financial facilities to the client under Bai- Muajjal mode.
Bai-Murabaha TR
To procure/purchase raw-materials for executing export order the Bank provides investment facilities to the client under the mode of Murabaha TR. In this case, the Bank obtains Trust Receipt signed by the client and handover the imported goods to the exporter.
Post-Shipment Investment
Bank provides post-shipment investment facilities through Negotiation (FBN) and purchase of export bills. It normally negotiates or purchases the export documents if the documents/bills prepared by the exporter are found in order/correct in all respect. The bank adjusts the liabilities against FBN/FBP after receiving the export proceeds and earns exchange income from this. This mode of investment is in compliance with the Islamic Shari’ah.