Azerbaijan's largest bank expands sources of Islamic finance
Azerbaijan, Baku, Aug. 9 / Trend I.Khalilova /
The International Bank of Azerbaijan (IBA) is preparing to sign a memorandum on further cooperation with the Islamic financial institutions and a loan agreement under the attraction of Islamic finance Murakhaba, the head of the working group on introduction of Islamic banking in the IBA Behnam Gurbanzade told Trend on Thursday.
"Prior to August 10 the formation of a pool of participants from the Islamic financial institutions will be completed. Total amount of funding varies from $20 million. One large financial institution collects credit funds from other investors, and on its behalf submits to the IBA," Gurbanzade said.
He said increase in the portfolio for the Islamic finance will be announced until late August, immediately after the official opening in the IBA of the structure to provide products and services of Islamic banking.
"The credit line tools will be directed to finance small and medium-sized businesses based Murahaba and leasing," Gurbanzade said.
The bank intends to provide direct Islamic leasing services, and not to redirect funds to its subsidiary leasing structure - Joint Leasing.
Murakhaba (murabakha) is a contract for sale between the buyer and seller at a higher price than the price of the original, which the seller had bought the goods. As a financial instrument murabakha involves the purchase by the seller (financier) of certain goods necessary for the buyer, and their resale to the buyer on the basis of cost plus a mark-up made. Operating profit (margin) and the time of payment (usually in installments) is stipulated in the original contract.