ISLAMIC TRADE FINANCE & TRADE PROMOTION PROVIDER SOMETHING - - PowerPoint PPT Presentation
ISLAMIC TRADE FINANCE & TRADE PROMOTION PROVIDER SOMETHING ABOUT US SERVING MEMBER AND NON-MEMBER COUNTRIES ITFC became operational in January, 2008 with the purpose of advancing trade to improve the economic condition and livelihood of
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SERVING MEMBER AND NON-MEMBER COUNTRIES
ITFC became operational in January, 2008 with the purpose of advancing trade to improve the economic condition and livelihood of people across the world As a leader in Shari’ah-compliant trade finance, ITFC deploys its expertise and funds to businesses and governments in its member countries. Our primary focus is to encourage and act as a catalyst for intra-trade among OIC Member Countries
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“ITFC is the leading provider
member countries' needs”
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“ITFC is a catalyst for trade development among OIC member countries and beyond”
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SOLUTIONS FOR IMPACT
PREFERRED CREDITOR STATUS
AAA RATING RICH HERITAGE TECHNICAL EXPERTISE GEOGRAPHIC PRESENCE
Structured Trade Finance SMEs/LDMCs: Facilitation, Capacity Building, and Promotion 57 member countries Member of IDB Group Over 30 years of experience in trade finance/promotion & cooperation Originator, Structurer & Arranger, Implementer 56 member countries in 4 continents
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Total approvals in 2016 are US$4.48 billion down Since inception in 2008, ITFC’s cumulative funded financing reached to US$35 billion In 2016, total number of
51% 68% 60% 64.5% 69% 67.5% 47% 53% 48%
39.5% 24% 33% 24% 26% 27% 44% 36% 35%
9% 7% 6% 6% 4% 4% 8% 9% 17%
2,000 3,000 4,000 5,000 6,000 7,000
Asia/CIS MENA Sub-Saharan Africa
(US$ billion)
2.5 2.17 2.55 3.03 4.47 5.05 6.05 5.16 4.48
2008 2009 2010 2011 2012 2013 2014 2015 2016
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65%
Sovereign
12%
Structured
Approvals by Sector – (1437H- 2016) Approvals by Instrument– (1437H-2016)
12%
Food & Agriculture
2%
Minerals and Chemicals
21%
Other
11%
Unsecured
11%
Bank Guaranteed
60%
Crude and Petroleum Products
1%
Credit Insured
1. Direct Financing: Financing is extended directly from ITFC through a Murabaha Agreement between ITFC and the Beneficiary 2. Line of Financing: ITFC provides lines of financing to local Financial Institutions which act as Intermediary (Lines Agents) between ITFC and the end beneficiaries for the Trade Finance Operations upon signing a Line Master Agreement 3. Two-Step Murabaha: ITFC provides Two-Step Murabaha Financing to local Financial Institutions or commercial banks to be extended to SMEs 4. Co-Financing & Syndication: In this mode of financing, ITFC, acting as a Mudarib (lead arranger or co-arranger), invites
more Financial Institutions to participate in the financing
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ITFC may also participate in syndications arranged by
institutions
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ITFC’s trade financing facilities (Total financing reached USD 6.68 billion).
total amount of USD 3.9 billion in Turkey.
terms of trade finance approval size (2.07 billion) thanks to the openning
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Participation Banks, Turk Exim Bank and Investment Banks- for line of financing made available for the benefit of SME size Turkish exporters and importers.
especially under the structured trade finance facilities which provide tailor made solutions for the import or pre export financing needs.
financing through local banks. The development impact is expected to be enhanced through these bank lines.
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102 204 124 125 312 415 640 620 810
100 200 300 400 500 600 700 800 900
2008 2009 2010 2011 2012 2013 2014 2015 2016
ITFC Approvals in Turkey (usd million)
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2SMF, 2581, 66%
STF, 737, 19% Clean, 240, 6% LG, 343, 9%
ITFC Turkey 2008-2017 ($3,9b)
(1) A Murabaha financing agreement is signed between ITFC and the beneficiary.
(2) The supplier ships the goods to the beneficiary. (3) ITFC makes payment of purchase price directly to the Supplier. (4) ITFC sells the goods to the beneficiary (5) The beneficiary repays the sale price directly to ITFC. ITFC takes the direct credit risk of the beneficiary.
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Beneficiary (2) Shipment (3) Payment of Purchase Price (5) Repayment of Sale Price at Maturity
(1) A Line of Financing agreement is signed
between ITFC and the local Bank (2) Local Bank requests Sub-Murabaha Agreements to be signed between ITFC and the beneficiary (3) Local bank provides bank guarantee for the beneficiary (4) Payment under the financing is disbursed directly by ITFC (5) The beneficiary repays the sale price directly to ITFC ITFC takes the risk of the local bank Local Bank takes the credit risk of the beneficiary
12 (2) 2nd Murabaha Agreement
Beneficiary
(1) 1st Murabaha Agreement (3) Shipment (4) Advise of Shipment (6) 1st Sale (8a) Repayment
at Maturity (5) Payment of Purchase Price (7) 2nd Sale (8b) Repayment
at Maturity
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Beneficiary
(1) Mudaraba Agreement (3) Shipment (6) Sale of Shipment (4) Payment of Purchase Price (8) Repayment
(2) Murabaha Agreement (4a) (4b) (4c) (5) Payment of Purchase Price (7) Repayment
Maturity (8a) (8b) (8c)
(1) A Line Agreement is first concluded between ITFC (as Fund Provider) and a Financial Institution (as Guarantor of underlying Murabaha Transactions). (2) Subsequent Murabaha Agreements are then concluded between ITFC and End Beneficiaries (SMEs). (3) Bank Guarantees are issued by the Financial Institution in favor of ITFC covering the risk of End Beneficiaries. (4) The Supplier ships the goods directly to the End Beneficiaries. (5) ITFC shall make the payment of Purchase Price directly to the Supplier. (6) ITFC will then sell the goods to the End Beneficiaries on Murabaha basis (Sale Price). (7) At maturity, the End Beneficiaries shall pay the Sale Price to ITFC. In case of non-payment, the Financial Institution shall cover the unpaid amounts.
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Beneficiary
(1) Line of financing agreement (2)Murabaha Agreement (3) Issuance of bank guarantee (4) Shipment (5) Payment of purchase price (6) Sale of Goods (7) Payment of sale price at maturity
→ to conventional payment guarantee (Gov’t/Bank/Corp)
More Secure
(Self-Liquidating Transaction)
Risk (Collateral, Market Risk, Documentation & Business Operational Risk)
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1. Client pays DEPOSIT (Security Margin) 2. Goods shipped and docs. are presented 3. ITFC pays the supplier for the Goods 4. Goods delivered to Warehouse, CM issues WR to ITFC 5. Client pays for delivery of portion of the shipment 6. ITFC sends release instruction to CM 7. Client takes delivery of the Goods
Documents presented 2. 100% Payment 3. 7
Order
Warehouse Collateral Manager
Margin
Beneficiary
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CUSTOMER BENEFITS ITFC BENEFITS
Position
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Accessibility to Farmers → Development Mandate
Higher Limits
Backed Transaction → Risk Mitigated Structure
is a Perfect Match for Islamic Finance (Murabaha)