A programme that insures letter of credit (L/C) transactions is gaining popularity in the Arab and Islamic world according to the Islamic Corporation for the Insurance of Export Credit and Investment (ICIEC).

The corporation's Documentary Credit Insurance Policy (DCIP) is apparently proving most popular in Turkey and the Gulf Cooperation Council (GCC) countries.

Deal flow

The ICIEC issued its first DCIP for Kuveyt Turk Participation Bank in October 2010 and subsequently issued similar policies to another Turkish institution, Bank Asya, and the Saudi British Bank (SABB) in Riyadh.

The policies provide those banks with insurance cover for L/Cs confirmed by them.

Improved L/C capacity

The ICIEC says the DCIP will help the banks increase their capacity for L/Cs issued by foreign banks while helping them to better manage some of their international bank risks.

In June 2011, ICIEC issued yet another DCIP in Turkey with Aktifbank, which already operates as a local agent for ICIEC in the Turkish market.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.