Islamic Trade Financing

Islamic Trade Financing

Islamic Trade Financing

We arrange and place Sharia-compliant trade finance with regulated Islamic banks and windows. Structures include Murabaha for imports, Tawarruq working capital, Salam and Istisna for production, Kafalah bank guarantees, and Islamic letters of credit with advising and confirmation. All work is subject to full KYC, AML, sanctions checks, and Sharia review by the relevant supervisory board.

Sharia-Compliant Product Suite

Import Murabaha With LC-i
Bank purchases the goods and sells to you at cost plus disclosed profit. Documentary LC supports shipment. Payment is at sight or deferred per contract.
Export LC With Islamic Confirmation
Advising and confirmation by an Islamic bank. Proceeds paid at sight or on maturity. Works with UCP 600 while meeting Sharia conditions on fees and agency roles.
Tawarruq Working Capital
Commodity Tawarruq provides short tenor liquidity for inventory and trade costs. Transactions are executed back-to-back with clear title transfer and agency documentation.
Salam For Prepayment
Upfront payment for specified goods to be delivered later. Suits agriculture and standardized commodities where quantity, quality, and delivery terms are fixed in advance.
Istisna For Manufacture
Financing for goods to be manufactured or processed. Delivery and stage payments follow milestones defined in the production schedule and the Istisna contract.
Kafalah Bank Guarantees
On-demand guarantees for bid, performance, and advance payment. Fees cover service and documentation. Collateral and indemnities are set by the issuing bank.

How Islamic Trade Financing Works

1

Qualification And Sharia Screen

We review counterparties, goods, jurisdictions, and ensure the trade does not involve prohibited products. A preliminary view is shared with the target Islamic bank.

2

Structure Mapping

We select Murabaha, Tawarruq, Salam, Istisna, or a mix. We define documentary flows, title transfer, payment milestones, and agency roles under Wakalah where needed.

3

Term Sheet And Board Approval

We obtain bank pricing and covenants. The bank’s Sharia board reviews the structure and specimen clauses. Conditional approval is issued subject to due diligence.

4

Documentation And Agency

We prepare the Master Murabaha or Tawarruq agreements, Wakalah appointments, Kafalah forms, Salam or Istisna contracts, and LC wording that fits the final structure.

5

Issuance And Settlement

The bank issues the LC or guarantee, executes the purchase and sale steps, and disburses proceeds. Takaful is placed where required. Payments follow the agreed schedule.

6

Post-Issuance Monitoring

We track shipments, documentary presentation, asset title, and milestone payments. Any amendments are cleared with the bank and its Sharia board.

Capital And Security Expectations

Operating Equity Baseline
Plan for a minimum of USD 500,000 in unencumbered equity to start. In some markets and with some banks, the practical floor is USD 2 to 5 million.
Equity Per Transaction
Expect to contribute 20 to 40 percent of each deal. The percentage depends on tenor, goods, country risk, and whether confirmation or insurance is present.
Security Package
Cash margins, pledge over goods and documents, corporate indemnities, and assignment of receivables. Guarantees are structured as Kafalah with fees limited to service charges.

Where Islamic Trade Finance Fits

Import Programs For Distributors
Murabaha with LC-i to source goods from approved suppliers. Payment at sight to the exporter and deferred settlement by the importer.
Project Equipment And Materials
Istisna or Ijara for equipment, Kafalah for performance, and LC-i for staged deliveries with inspection milestones.
Agri Pre-Harvest And Offtake
Salam for prepayment against fixed specifications and delivery windows. Post-shipment settlement through LC or direct sale.
Working Capital Bridging
Tawarruq lines to cover duties, freight, and storage. Commodity trades are executed with clear audit trails and title transfer.

Pricing Structure And Typical Costs

  • Profit Rate. Disclosed profit on Murabaha or Tawarruq based on tenor and risk. Quoted on a per annum basis and applied to the cost price.
  • Service Charges. LC advising, confirmation, and guarantee issuance charged as service fees within Sharia limits.
  • Commodity Costs. Brokerage and exchange fees for Tawarruq transactions where applicable.
  • Takaful. Cargo and liability cover priced per route, goods, and insured value.
  • Legal And Audit. Documentation, translations, and Sharia board review billed at cost where required.

Documentation We Prepare

Core Agreements
  • Master Murabaha or Tawarruq agreements
  • Wakalah agency appointments
  • Salam or Istisna contracts where relevant
  • Kafalah guarantee forms and indemnities
Trade And Settlement
  • LC wording under UCP 600 adapted for Islamic structures
  • Title transfer steps and delivery proofs
  • Takaful binder and claims process
  • Sharia board comfort letter or approval note

Risk And Control Framework

  • Goods And Routes. We screen goods and shipping corridors for sanctions and policy constraints.
  • Documentary Cleanliness. We mirror contract terms in LC fields to reduce discrepancies and delays.
  • Title And Possession. We evidence title transfer at each step. Agency roles are documented and dated.
  • Hedging. Where required, we arrange Sharia-compliant risk management such as waÊ¿d-based FX forwards under recognized standards.

Frequently Asked Questions

Can an Islamic letter of credit follow UCP 600?
Yes. The LC can follow UCP 600 while fees and roles are set to meet Sharia requirements. The bank’s Sharia board oversees the structure.
How is profit calculated in Murabaha or Tawarruq?
Profit is disclosed as part of the sale price based on tenor and cost. There is no interest. All charges are stated in the contract.
Are guarantees allowed under Sharia?
Kafalah guarantees are permitted. The bank charges a service fee and may require collateral. Terms vary by bank and jurisdiction.
Can receivables be sold for early cash?
Sale of debt at a discount is restricted in many markets. Alternatives include assignment for collection, purchase at par where allowed, or working capital via Tawarruq.
What equity do banks expect?
Plan for 20 to 40 percent per transaction. As a starting point, hold at least USD 500,000 in operating equity. Some banks and markets expect USD 2 to 5 million.

Request Islamic Trade Finance Issuance And Placement

Share your contract, goods, target tenor, and equity plan. We will respond with a structure, bank route, and documentation checklist.

Start Your Islamic Trade Finance Mandate

All services are best efforts and depend on full KYC, AML, sanctions screening, credit approval, and Sharia board review by the issuing bank. Nothing here is a commitment to lend, issue, confirm, insure, or guarantee. Prohibited goods and restricted jurisdictions are not supported.

Get Started With Us

Submit Your Deal & Receive a Proposal Within 1-3 Working Days

Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.


All submissions are promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.

Express Application Submit Your Deal
Request a Proposal
Request a Proposal / Submit a Deal

Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.

Trade Finance

Tap into solutions like letters of credit, bank guarantees, and payment facilitation. We address the challenge of global transaction risk through structured strategies that foster cross-border growth. Complete the form to unlock streamlined funding aligned with your commercial objectives.

Submit a Request

Project Finance

Access non-recourse funding for infrastructure, renewable energy, or other capital-intensive ventures. We mitigate capital constraints by isolating project assets and focusing on risk management. Provide your details to receive a structure that drives growth and maximizes returns.

Submit a Request

Acquisitions

Secure financing for business or real estate acquisitions. We ease transaction hurdles by reviewing cash flow, synergy opportunities, and exit plans. Complete the form for a customized proposal that supports your strategic investment objectives.

Submit a Request

For Banks

Financely assists banks facing Basel III pressures by distributing trade finance deals and providing collateral for letters of credit. We reduce capital burdens while preserving client relationships and fostering service expansion. Submit your request to optimize your trade finance offerings.

Submit a Request

Once we receive your submission, our team will review your information to determine feasibility. If eligible, you will receive a proposal or term sheet within 1–3 business days. Visit our FAQ and Procedure pages for more information.

Disclaimer: Financely provides financing based on due diligence and feasibility. Approval is not guaranteed, and past performance does not predict future outcomes. All terms are subject to review. Financely primarily assists with structuring and distribution. Qualified parties carry out the project if the client approves the proposal.

Still Have Questions? Schedule a Consultation

If you still have questions after visiting our FAQ and Procedure pages, we invite you to book a paid consultation for personalized guidance. A $250 USD fee applies per session.