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Within days of the launch of Dubai commodities receipts (DCRs) by Dubai Metals and Commodities Centre (DMCC), two financing deals have taken place to facilitate imports of sugar by Al Khaleej Sugar Company.

While Dubai Islamic Bank (DIB) took the Islamic finance route to structure the commodity finance transaction, Standard Chartered Bank (SCB) went the conventional route to provide financing to the sugar company under the DCR system.

Al Khaleej Sugar can now access additional funds by using its physical commodity stocks as security in line with the DCR system. In both the deals, the commodity (sugar) has been pledged with SGS, the inspection, verification, testing and certification firm, acting as the collateral manager.
Wasim Saifi, senior vice-president corporate banking, DIB, says: “This partnership with Al Khaleej Sugar is a significant breakthrough for the bank and for commodities trading and financing in Dubai.”

Jonathan Morris, head of client relationships UAE and Oman, at SCB, adds that DCR is a unique concept in the commodity trading business enabling clients to enhance their trading capabilities beyond the balance sheet by gaining access to additional bank finance.