Sharia Board Rulings — Credits & Bills

• A documentary credit issued by a conventional bank may be confirmed, provided the confirmation does not lead to interest and the purpose of the credit is lawful.
• Where a credit is settled in foreign currency, the customer remains indebted in that currency; the rate applied is the rate on the day the debt is settled, never a rate fixed in advance.
• An extension fee may not be charged as a percentage of the credit amount — only the actual cost may be recovered.
• A bill of exchange in an acceptance credit does not affect its validity, but the bank may neither discount it nor help it be discounted.
• A rebate commission received from a conventional confirming bank on a fully covered credit may not be taken: the arrangement amounts to a guarantee, and a guarantee may not be paid for.
• Incoming remittances are converted at the rate on the day they are handed to the customer.
• Commissions approved by the Board are those matching genuine additional work: managing an accepted deferred bill, settlement outside a credit's validity, cancelling a bill or changing the funding source, and cancelling an export undertaking.

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