Dubai, June 10 (IANS) The United Arab Emirates’ (UAE) biggest free zone Dubai Multi Commodities Center (DMCC) welcomed Islamic Bank of Afghanistan as its newest member, DMCC said on on Saturday.
The bank, Afghanistan’s first Islamic bank, will use service facilities of DMCC in order to execute multi-currency trades in line with Islamic law, or Sharia, DMCC said in a statement.
The bank is licensed by the central bank of Afghanistan in April in line with interest-free, speculation-free Sharia principles, Xinhua reported.
It will use the DMCC Tradeflow, an online platform for registering ownership for commodities stored in Dubai, under the Murabaha transaction model “in order to take multi-currency trades from across the globe,” said the statement.
Murabaha is a key concept in Islamic financing, where a markup is known in advance between parties to help reduce ambiguities in the transaction.
Under Murabaha, the buyer buys a commodity and sells it at higher prices during an extended period and receives payment from his client in order to avoid interest, which is “haram” (prohibited) under Sharia.
“Our partnership will facilitate the bank’s Murabaha transactions to develop a wide range of new Islamic financial institutions,” said Sanjeev Dutta, Executive Director of commodities at DMCC.
The membership “will enable us to offer a broader range of Sharia-compliant financial products and services, and reach to the unbanked customers within our country,” said Amer Khalil-ur Rehmanm, CEO of Islamic Bank of Afghanistan, which runs 59 branches across its home market.
According to DMCC, more than 26,000 transactions were executed on the DMCC Tradeflow platform in the first quarter of 2018.
In the first four month of this year, DMCC Tradeflow has handled Sharia-compliant commodities worth $6.95 billion as 30 institutions from three continents were involved.
DMCC harbors more than 15,000 firms from 170 countries employing 60,000 people.