(AFP) - The Islamic Development Bank (IDB) obtained its first line of credit under Islamic lending terms, for 84 million dollars, from a syndicate co-led by Gulf International Bank, GIB
The loan will permit IDB, an organ of the Organization of the Islamic Conference, to finance trade among its member countries, GIB said.
GIB is equally owned by the six Gulf monarchies. It and the Kuwait Finance House, an Islamic bank, are joint co-leaders of the credit, in which the Islamic-banking arms of Standard Chartered Bank and ABN-Amro Bank also participated.
A total of 10 banks in the Arab and non-Arab worlds are participating in the syndication.
The loan is to be repaid in accordance with the so-called "murabaha" rules of Islamic banking, which allows banks to circumvent the Koran's prohibition of charging interest.
Under murabaha, the lender buys products wanted by the borrower and delivers them to the borrower. The borrower subsequently pays the lender the value of the merchandise, plus a pre-agreed amount that represents the value of the risk incurred by the lender.
Not until the borrower pays the debt is the ownership of the goods actually transferred by the lender.
GIB said in a statement that the facility has an availability period of six months and that each use of it will be for a six-month term.
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