IDB sets up fund with Islamic Trade Finance Corporation

The Islamic Development Bank (IDB) has signed a mudaraba agreement with the newly-created International Islamic Trade Finance Corporation (ITFC) to establish a US$1bn fund.
The purpose of the fund is to support the ITFC's trade finance operations and further develop intra-trade among member of countries of the Organisation of the Islamic Conference.

Under the terms of the agreement, ITFC will act as the mudareb or the manager, on behalf of the IDB.

The ITFC was set up to take over all the trade business previously run through various windows within the IDB group, with the aim of consolidating all the bank's trade finance business within one group.

Signing the agreement, Waleed Al Wohaib, CEO of ITFC commented: "Our status as an autonomous entity gives us the capacity to rapidly respond to changes in the business environment and significantly enhances our capability to meet dynamic market needs.

“ITFC is a market-driven operation that conducts business according to world-class standards in the promotion of IDB developmental objectives through the various specialised funds that will be made available.”

A mudaraba is an Islamic financing term that refers to a contract made between two parties where one provides the required funds, and the other provides expertise and agrees to divide any profits made in advance.