The International Islamic Trade Finance Corporation (ITFC) and Azerbaijani commercial bank, Rabitabank, have signed a US$10 million letter of credit (L/C) confirmation facility to help meet the private sector's trade finance needs.

The facility particularly targets small- and medium-sized enterprises (SMEs) and aims to contribute towards the promotion of Sharia-compliant trade financing solutions in Azerbaijan.

Expanding L/C businessThe facility is the first L/C confirmation line extended by ITFC to Azerbaijan-based commercial banks and is aligned with ITFC's private sector strategy.

This strategy emphasises the expansion of partnerships with banks for supporting the private sector and SMEs in member countries, as well as the expansion of L/C confirmation business.

The recently signed US$10 million facility falls within the objectives of Rabitabank to grow its trade finance portfolio.

Islamic finance conference

The facility was announced to coincide with a workshop on Islamic finance organised by ITFC in collaboration with Azerbaijan's ministry of economy.

The workshop aimed to provide participating financial and government institutions with a comprehensive understanding of Sharia-compliant finance. It focused on Islamic financial tools, including sale-based, lease-based, and equity-based instruments and looked at their application in trade finance and capital markets.

Since 2009, ITFC has provided US$83.4 million to various private sector clients in Azerbaijan.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.