Amidst growing demand for Shari'ah compliant finance from business customers, FNB has launched trade finance as part of its Islamic banking products. Photo: File

DURBAN - Amidst growing demand for Shari'ah compliant import finance from business customers, FNB has launched trade finance as part of its broad range Islamic banking product suite.  

The FNB Islamic Trade Finance offering is modelled on the Murabaha arrangement which entails the bank entering into an agreement to purchase and assume legal possession of items being imported and selling them to the customer upon delivery. 

As part of the agreement, the customer is required to facilitate logistics relating to the purchasing and receipt of goods from the supplier/exporter.  

The offering further includes access to various trade finance products such as, import letters of credit, foreign bills for collection, forward exchange contracts, guarantees and open account payments.

Amman Muhammad, FNB Islamic Banking Chief Executive said, "The launch of a trade finance offering cements our commercial Islamic banking value proposition, and serves as a major milestone in our continuous journey to create a holistic Islamic financial services platform that caters for our customers’ specific Shari'ah compliant banking requirements". 

"There’s strong appetite in the market for Islamic trade finance products amongst South African businesses. Therefore, access to this finance will create opportunities for more businesses to actively participate in trade activities which will have a positive impact on GDP in the long-term," added Muhammad. 

Islamic trade finance is estimated to contribute around $186bn across the world. 

Muhammad said that although Islamic Banking is one of the fastest growing financial services sectors globally, more specifically on the African continent - Islamic trade finance based products are still largely untapped, which presents significant growth opportunities for the industry. 

Moreover, with Southern Africa being home to an estimated 250 million Muslims, we anticipate significant growth in Islamic trade finance as the continent makes progress in concluding the African Continental Free Trade Area (AfCTFA) agreement, aimed at facilitating a single market for goods and services.

FNB Islamic Banking’s range of products and services include Islamic transactional banking, asset finance, insurance and an extensive range of Islamic investment options.