The SAC of Bank Negara Malaysia at its 194th meeting on 25 June 2019 ruled the following:
Import Financing Product Based on Bai` Istijrar for Islamic Letter of Credit
The SAC approved the proposed structure of import financing based on bai` istijrar (sale of supplies with deferred price) for Islamic Letter of Credit (Letter of Credit-i) subject to the following conditions:
- The Facility Agreement must clearly specify the following:
- Responsibility of the importer (customer) as an agent to execute the purchase of goods on behalf of the Islamic financial institution (IFI);
- Responsibility of the importer to purchase goods from the IFI upon receiving the imported goods and/or documents; and
- Risks and liabilities of the contracting parties with regards to ownership of the goods at each stage of the sale transaction.
- The IFI must ensure that the transactions above are executed in a proper sequence where the responsibility of the importer as the purchasing agent must be fulfilled prior to the purchase of goods by the importer from the IFI.
The SAC’s approval on the above application of bai` istijrar contract is confined to the proposed structure due to the specific needs for such financing product under trade finance facility.
Please refer attachment for more information.