Monday 27, November 2017 by Jessica Combes

NBF structures Shari'ah-compliant bullion financing solution for Malabar Gold


National Bank of Fujairah (NBF) PJSC announced the completion of a Shari'ah-compliant bullion financing transaction with Malabar Gold.

This marks the first-ever Shari'ah-compliant bullion financing in accordance with the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) standards in the precious metals industry in the UAE. This partnership follows the launch of the AAOIFI Shari'ah Standard on Gold in December 2016 in collaboration with the World Gold Council.

“We are delighted that we have been at the forefront of this major transaction in the gold and jewellery market. The transaction reflects our continued commitment to delivering innovative products and quality service to our customers in the precious metals industry. This transaction underscores NBF’s focus to develop the Shari'ah-compliant banking sector and cement our NBF Islamic team’s capabilities to lead the development of new products. We would like to congratulate and appreciate the support from our customer and partners Malabar Gold, Amanie Advisors and World Gold Council in supporting our efforts to develop this transaction,” said Vince Cook, NBF’s CEO.

The gold standard sets out the Shari'ah rules for trading and transacting in the metal whereby the latter joins equities, real estate, Islamic bonds (Sukuk) and Takaful (insurance) as vehicles approved for Islamic finance. The standard lays out a clear guidance on the permissibility to trade in gold and makes it possible for Islamic investors to deploy to grow their wealth, diversify their portfolios, and protect them against market risks in a Shari'ah compliant manner. It also enables Islamic finance institutions to develop new gold-based products and transactions.

“As we look at expanding our presence across the GCC and establishing ourselves further as a prominent regional jewellery retailer, we also have a role to play in the development of the sector as a whole. NBF has proved to be a reliable partner, who has been with us throughout our journey. We appreciate their professionalism and expertise in the gold industry and Shari'ah-compliant products, which have helped us achieve this milestone. We are happy to be part of the inaugural Shari'ah-compliant gold financing transaction in the UAE, which will go a long way in supporting the precious metals sector by accessing the Shari'ah compliant banking products that represent almost 20 per cent of the UAE banking sector,” said Abdul Salam K P, Group Executive Director at Malabar Gold & Diamonds.

Since the standard’s launch, gold has shown a great potential to outperform other major Islamic asset classes in the long-run. Working closely with Amanie Advisors and Shari'ah Board, NBF has developed a unique Shari'ah compliant bullion financing solution to cater to the complex needs of its customers thus cementing its position as a key financing partner for the precious metals industry.

“We applaud NBF and Malabar for taking the lead in introducing and transacting the first AAOIFI-compliant Islamic gold financing transaction, which is a niche segment in the Islamic banking space. NBF has amassed valuable expertise in gold-based transactions over the years in the conventional space and we are very pleased indeed to see this expertise being applied in its Islamic window offerings as well. The AAOIFI Shari'ah Standard on Gold, in collaboration with the World Gold Council, comprehensively covers all potential types of gold-based transactions, giving due consideration to practical applications in the global gold market. After understanding all the range of interactions, the standard covers, one can only imagine what possibilities lie ahead for the development of gold-based Shari'ah-compliant financial products in the future,” said Maya Marissa Malek, Managing Director of Amanie Advisors LLC.

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