Jeddah, March 03, 2025 – A major milestone in international trade finance was achieved with the signing of a letter of credit insurance policy between two key institutions of the Islamic Development Bank (IDB) Group – the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) and the International Islamic Trade Finance Corporation (ITFC). This partnership aims to strengthen the management and mitigation of risks linked to documentary credit transactions, particularly those involving Shariah-compliant goods and services, both within the member countries of the Organization of Islamic Cooperation (OIC) and in broader global markets.
The newly established policy provides essential coverage for ITFC’s trade transactions, a move designed to enhance confidence in trade financing and promote smoother, more reliable financial operations across international markets. By offering robust risk mitigation, the policy ensures that documentary credit transactions can be executed with greater security, especially when dealing with Shariah-compliant products and services. This is particularly significant given the growing demand for Islamic finance and trade that adheres to Shariah principles, which has been expanding globally.
ICIEC CEO, Dr. Khalid Khalafalla, emphasized the importance of this policy, stating, “This policy reflects our firm commitment to boosting cooperation with institutions within the Islamic Development Bank Group. Through this collaboration, we aim not only to enable ITFC to effectively manage risks associated with documentary credit transactions but also to unify our collective efforts in promoting seamless and reliable trade flows between Shariah-compliant markets. Ultimately, this will benefit all member countries of the OIC, contributing to economic stability and growth.”
The agreement between ICIEC and ITFC is expected to have far-reaching positive effects on trade and financial services, particularly for member countries seeking to boost their participation in the global economy while adhering to Islamic finance principles. By providing vital coverage and facilitating smoother transactions, this partnership will foster greater economic integration within the OIC and beyond, encouraging sustainable development and fostering greater trust in Islamic trade and financial operations.
As global trade continues to evolve, the ICIEC and ITFC’s collaborative effort positions them at the forefront of fostering innovation and stability within the realm of Islamic finance and trade, solidifying the IDB Group’s role as a key player in global economic development.