It is a commodity-based financing technique, specifically designed for commodity producers and trading companies doing business in developing markets. It provides customers with the customize financing solution of either single or combination of financing products to finance various stages of commodity trade transaction cycle secured against the control/rights over the commodity by the bank

Features

• An alternative mode of financing that improves the customer's cash flow and liquidity
• The bank acts as an arranger/financier to structure a financing solution for the seller/exporter and/or buyer/importer by combining end-to-end funding solutions for the entire trade value chain
• Security required is a pledge of commodities
• Customized financing solution throughout the various stages of the trade transaction
• Focuses on the flow of goods and their origin
• Combination of various Islamic trade products such as LC-i TR-i, AB-i
• Opportunity to maximize production capacity

Margin of Financing (MOF) / Financing amount

Varies, depending on business requirement and trade cycle as well as type of commodity financed

Benefits

• A tailor-made financing solution in meeting customer’s needs and requirement for the commodity trading and for manufacturing of commodity-based products
• Improving cash flow and liquidity position of customer
• Risk evaluation would be based on the customer/company’s performance track record and collateral valuation of the underlying trade product
• Customized financing solution throughout the various stages of the trade transaction
• Opportunities to venture into new commodities market
• Cost savings of 20% on ad-valorem stamp duty to be paid on related legal documents
• Underlying transactions is based on ‘halal’ goods
• Financing rate of the underlying transaction is fixed throughout the tenor.