Noor Bank is to rollout an online solution for processing murabaha transactions.

Commodity murabaha financing allows Islamic banks to manage their liquidity more effectively, by appointing a broker to buy a specific commodity against cash payment and then sell it on deferred payment terms to a third-party broker on the same purchase date for a pre-ordained profit. Traditionally, it has been an offline product.

The system, which is used to process online commodity financing via the Tradeflow platform of the Dubai Multi Commodities Centre (DMCC) has previously been used for transactions worth Dh14mn (about US$3.8mn) for an SME client, will now be made available to all of Noor Bank’s corporate and SME clients.

The Dubai-based bank says in a statement that the move will allow for further process digitisation, quicker turnaround time and better cut-offs for clients with same-day processing.

The solution was developed in collaboration with the DMCC, which says that the relationship shows how “Tradeflow is becoming an indispensable tool for Islamic banks to trade commodities for murabaha financing and expanding the scope of activities Islamic banks can offer to their clients”.

Noor’s global transaction services head Ehsaan Ahmed says: “We are delighted to have achieved this milestone. The solution, implemented in close collaboration with the DMCC, not only adds more value for our clients, but also paves the way for other Islamic banks to follow suit. Undoubtedly, the initiative also reflects our commitment to positioning Dubai as the global Islamic capital.”

Also in the UAE, United Arab Bank has launched an online trade portal that allows its clients to create, track and report their transactions. The web-based platform allows customers to create products such as commercial and standby letters of credit, shipping and banker’s guarantees and financial requests. The overall aim is to make trade processes quicker and more efficient.