The Role of Islamic International Factoring
Islamic banking has the potential to foster greater financial intermediation and inclusion, especially among Muslim populations that may be under-served by conventional banks, and to facilitate lending in support for small and medium sized enterprises, the IMF says.
Since Shariah allows trade with people from other religions, it is important that countries adapt their regulatory, supervisory, and consumer protection frameworks to address the unique risks in Islamic finance, take further steps to develop Shariah-compliant financial markets and monetary instruments, and strengthen the international architecture for growing cross-border operations.
A working group has been established under the leadership of FCI with the legal committee and some members in UAE. The working group finished its research and prepared a contract facilitating Islamic international factoring transactions in 2018. The Supplemental Agreement for Islamic International Factoring has been reviewed and revised by Islamic scholars and it as finally approved by the Council of FCI during its 50th Annual meeting in Amsterdam in 2018 (FCI members can find the agreement here).