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IIFM Issues Global Standards for Shariah Wakalah Agreements

Published: 03/06/2013 07:24:12 AM GMT
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The International Islamic Financial Market, a Bahrain-based regulator, issued global guidelines today to unify and govern Shariah-compliant contracts (more)

The International Islamic Financial Market, a Bahrain-based regulator, issued global guidelines today to unify and govern Shariah-compliant contracts used between an agent and a service provider.

The Wakalah agreements will seek to broaden the range of liquidity-management products for lenders, Ijlal Ahmed Alvi, the institution's chief executive officer, says in a statement issued in Singapore, where the World Islamic Banking Conference is taking place. They will cut reliance on commodity-backed contracts amid limited supply of products that conform to Koranic principles.

Islamic law prohibits the payment of interest and bans investment in industries such as gambling and alcohol deemed as unethical. Under a Wakalah agreement, a lender acts as an agent between say an importer and exporter by issuing a letter of credit and is paid fees and commissions in the place of interest.


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