Islamic Letters of Credit (LC)

Under this concept the bank will structure this product under the Islamic concept of “Murabaha”. Murabaha is defined as a sale transaction wherein the Bank (the Seller) purchases, on the basis of a prior undertaking from the customer (the purchaser) called Promise to Purchase, the asset subject of the Murabaha for its own account, and possesses it to resell it to the customer at its known cost plus a profit margin agreed upon in Murabaha Sale contract.

Murabaha LC

In Murabaha LC; The customer requests the bank to open, in the bank’s name, an irrevocable LC to receive all documents representing and evidencing title and possession of the described goods in accordance with the terms set out for the LC. The Bank (the importer) issues a Letter of Credit in favor of the beneficiary (the exporter). The Bank pays against trade documents drawn in compliance with the letter of credit terms. Upon the goods arrival, the Bank sells the goods in Murabaha sale contract to the customer at an agreed profit margin to be paid by the customer in deferred basis or in cash.

Wakala/ Murabaha LC

Wakala/ Murabaha Letter of Credit is similar to Murabaha LC but in this case the Bank and upon the customer request s appoints the customer to act as an undisclosed agent to the Bank through a Master Agency Agreement allowing the customer to purchase the requested commodity on behalf of the bank. Upon the goods arrival, the Bank sells the goods in Murabaha sale contract to the customer at an agreed profit margin to be paid by the customer in deferred basis or in cash.

Cash Payment LC

In this type of facility, the LC is opened against 100% cash coverage based on the customer’s request for an irrevocable LC (LC application) and to receive all the documents in the customer’s name in accordance with the terms set out for the LC.

What are the Shari’ah Compliant products & Services that UAB Islamic Banking will offer to UAB SME/Corporate clients?
UAB Islamic Banking will offer all types of Islamic facilities on Liability and Asset. Products like:


Islamic Product
Murabaha LCs
Asset/s Finance
Commodity Murabaha Local Bill Financing
Finance Against Trust Receipts
Business Installment Finance
Current Accounts

Are Shari’ah Compliant products & services designed only for Muslims?
No, anyone can avail the products & services of UAB. We encourage all customers irrespective of their faith or religion to experience the Islamic products & services offered by the bank.

What are the differences between the Shari’ah Compliant offering of UAB and the conventional one?
UAB Shari’ah Compliant products & services are based on Islamic rules & principles which for instance don’t involve any kind of interest. The Shari’ah Compliant offering is based on asset backed finance technique where the customer for instance can get cash through a buy and sell of an underlying asset.

Do UAB - Islamic Banking has a Shari’ah Supervisory Board (SSB)? If yes who are they?
Yes UAB - Islamic Banking has an independent SSB to guide and to give FATWAS on specific Shari’ah related issues.
All UAB Shari’ah Compliant products & services are approved and examined by the SSB. The SSB of UAB consists of three distinguished scholars in the Islamic finance industry, namely;

A. Sheikh Dr. Mohammed Elqari - Chairman of the Board

B. Sheikh Dr. Ahmed A. Al Haddad - Executive Member of the Board

C. Sheikh Dr. Aziz F. Al Enz - Board Member

Does the rate under Shari’ah Compliant offering differ from the conventional rate?.
No, there will be no differences between the rates.

Under Shari’ah Compliant offering If the customer defaulted in paying the Installment / finance amount on due date & time, is there any kind of penalty customer will be charged?.

If the customer defaulted and/or delinquent in paying the outstanding on the due date & time he will be charged an extra amount on the outstanding defaulted/delinquent amount as approved by SSB. The extra amount will first compensate the bank of its actual cost subsequent to such delay where the remaining amount is to be paid on behalf of the customer to UAE charity organizations approved by SSB.

What are the documents required to obtain an Islamic facility?
All credit requirement for approving Islamic facilities will be the same as the one required for a normal SME / Corporate facilities.

Is a collateral against Islamic facilities permitted under the rules and principals of Shari’ah?.
Taking a collateral from a customer is up to the sole discretion of the bank when financing a customer. So, if the credit approval condition mandates the customer to provide a collateral against the finance amount, then such a condition does not conflict with the regulation of Shari’ah.

Who do I contact for help and enquiries after obtaining the facility?
Our dedicated customer service teams will be available to assist you;

  1. For SME Products at: 04-309 2 636 / 04-309 2 635
  2. For Large Corporate Products: 04- 304 5 999
  3. For Corporate Products: 800474