Islamic Banking Solutions
Fully Shariah-Compliant Financial Services
Our Islamic banking solutions are structured for review by qualified Shariah scholars, chosen with the client for each mandate, and cover across corporate banking, investment banking, and structured finance.
Core Principles:
- Zero tolerance for riba (interest-based transactions)
- Avoidance of excessive gharar (contractual uncertainty) and maysir (gambling and speculation)
- Ethical screening excluding haram industries including alcohol, gambling, arms manufacturing, pork products, and adult entertainment
- Asset-backed structures ensuring tangible economic activity
- Risk-sharing mechanisms that promote genuine economic partnership
Complete Banking Operations:
Corporate & Commercial Banking:
Our Islamic corporate banking division provides working capital facilities, trade finance, and treasury services through Shariah-compliant structures. We offer multi-currency accounts, international transfers and cash management solutions that avoid interest-bearing instruments.
Trade & Commodity Finance:
We structure complex international trade transactions using Murabaha and Wakala arrangements, financing everything from energy commodities to agricultural products. Our commodity Murabaha facilities enable clients to purchase raw materials or finished goods through our ownership and resale, ensuring Shariah compliance while providing flexible payment terms.
Treasury & Liquidity Management:
Our Islamic treasury operations manage liquidity through Wakala investment pools, short-term Murabaha arrangements, and Islamic money market instruments. We provide hedging solutions through Shariah-compliant derivatives and currency exchange services that avoid interest-rate exposure.
Islamic Financial Instrument Creation & Structuring:
Sukuk Origination & Structuring:
IFB can act as arranger and structuring agent for Sukuk issuances across several asset classes. Common structures include:
- Sukuk al-Ijara: Asset-backed certificates representing ownership in income-generating real estate or equipment, structured with true sale mechanics and Shariah-compliant rental streams
- Sukuk al-Mudarabah: Profit-sharing certificates for project finance, where certificate holders participate in project profits as silent partners
- Sukuk al-Musharakah: Partnership certificates for infrastructure and industrial projects, offering equity-like participation in project ownership and returns
- Sukuk al-Istisna’a: Manufacturing and construction certificates that finance the creation of assets from raw materials to completion
- Hybrid Sukuk Structures: Multi-asset sukuk that combine different underlying contracts to optimize risk-return profiles while maintaining Shariah compliance
Project Finance Structuring:
We create bespoke Islamic project finance structures for infrastructure, energy, and industrial developments. Our project finance capabilities include:
Islamic Infrastructure Finance:
For major infrastructure projects, we structure Istisna’a-based financing that funds construction from inception to completion. These instruments involve the bank commissioning the project developer to construct assets according to agreed specifications, with payment schedules aligned to construction milestones. Upon completion, the assets are leased back to the developer or sold to the ultimate user through Ijara or sale arrangements.
Islamic Energy Project Finance:
We develop sophisticated financing structures for renewable energy and conventional energy projects, combining multiple Islamic contracts in single transactions. For solar and wind projects, we utilize Diminishing Musharakah structures where the bank and developer initially co-own the project, with the developer gradually purchasing the bank’s ownership stake through operational cash flows.
Islamic Real Estate Development Finance:
Our real estate finance team creates multi-tranche instruments that fund land acquisition, construction, and permanent financing through integrated Islamic structures. We utilize Forward Ijara arrangements for pre-construction financing and convert these to conventional Ijara upon project completion.
Specialized Islamic Instruments:
Tawarruq-Based Solutions:
For clients requiring liquidity without underlying assets, Tawarruq arrangements through commodity platforms can generate cash through buy-sell sequences. Organised Tawarruq is contested: the OIC International Islamic Fiqh Academy ruled against it in 2009, and AAOIFI Shariah Standard No. 30 permits it only under strict conditions. Its use therefore depends on the client’s Shariah board.
Islamic Derivatives & Risk Management:
We structure Shariah-compliant hedging instruments, including profit-rate and cross-currency swaps documented under the ISDA/IIFM Tahawwut (Hedging) Master Agreement of 2010, and Islamic forwards (wa’d-based).
Working Capital Structures:
Our Islamic working capital facilities utilize revolving Murabaha lines, Wakala investment accounts, and trade receivables financing through Bai’ al-Dayn structures in jurisdictions where such sales are permitted.
Cross-Border Islamic Finance:
We structure complex cross-border transactions that manage different jurisdictions’ Islamic finance regulations while maintaining Shariah compliance. This includes multi-currency Sukuk, international Islamic syndicated facilities, and Islamic export credit arrangements.
