ESTABLISHMENT AND OBEJECTIVES
The Islamic Development Bank
(1DB) is a multilateral International Islamic financial institution with 54
countries of the Organization of the Islamic Conference (010) as its members.
It provides a framework to fulfil
aspirations of the Ummah for economic and financial cooperation among Muslim
countries in a global environment characterized by economic blocks and regional
groupings. The Bank was officially inaugurated on 20th October 1975. Its Head
Office is at Jeddah, Saudi Arabia.
MISSION AND CHALLENGES
During the last 25 years, the
Bank made sustained efforts for developing its capacity in Islamic financial
and economic practice. It is making significant contribution for enhancing economic
and social development in member countries.
As a long term policy, it is
helping the Muslim countries in facing the challenge of different global
currents through direct trade channels and technical cooperation programmes.
But it stands out quite distinctly from other financial institutions as it
performs all its activities in the framework of the Islamic Shariah.
ACHIEVEMENTS
The Bank has devised a number of
financing modes based on the Islamic Shariah such as grants, interest-free
loans, profit sharing, equity participation, leasing murabaha, installment
sale, istisna’a, and technical assistance.
By June 1999, the Bank had
financed about 3,000 operations for 53 member countries and 63 Muslim
communities involving more than US $ 20 billion. The Bank extends financing not
only for implementation but also for feasibility studies, engineering designs,
consultancy for supervising projects in the form of grants and concessionaire
loans.
In a bid to stimulate development
in 21 least developed member countries, the Bank has set up a Special Account
with a capital of US$ 150 million for those projects that cannot be financed
through its ordinary operations.
MODES OF FINANCING
Islamic Development Bank is
implementing its policies through following modes of financing. Import Trade
Financing Operation.
The Bank started this scheme in
1977 for financing import trade operations of basic commodities and development
oriented production equipments from member countries. The Bank has spent over
US$ 11 billion, since its inception, on more than 925 financing operations
under this Scheme involving 32 countries.
EXPORT FINANCING SCHEME
The Bank established this scheme
in 1987 in order to finance export of consumer goods, semi-processed goods and
non-traditional capital goods among member countries. The scope of market has
now been expanded to include OECD countries. The repayment period extends
normally from six to sixty months.
The mode of financing is usually
modaraba. The scheme has its own membership capital. By the close of 1998, it
had 23 members with a subscribed capital of Islamic Dinar (ID) 315 million. The
Bank had approved operations worth ID 306 million under the scheme by then.
ISLAMIC BANKS’ PORTFOLIO
The Bank has managed this
portfolio since 1987 in collaboration with 20 banks with a capital of US$ 65
million. The capital has now been increased to US$ 380 million. It is an
investment pool which mobilizes available liquidity with the Islamic banks. The
1DB channels it for trade and leasing with special emphasis on private sector.
THE IDB UNIT INVESTMENT FUND
The 1DB launched this Fund in
1990, with an initial capital of US$ 100 million and then increased it to US$
325 million by 1998. The Fund purchases leasing and installment sales projects
financed by the Bank and thus re-finances its activities. In order to enhance
its investment activities, the Fund also invests from its own account.
THE ISLAMIC CORPORATION FOR THE
INSURANCE OF INVESTMENT AND EXPORT CREDIT
It is an independent institution
affiliated with the 1DB. It commenced business in 1995 and by 1998, 34
countries of the OIC had signed its Articles of Agreement.
The Corporation issues insurance
policies to cover capital invested in export trade. It has a capital of US$ 150
million. Twelve member countries had availed of the insurance facilities of
this scheme till now.
SPECIAL ASSISTANCE TO MUSLIM
COMMUNITIES IN NON-MEMBER COUNTRIES
The 1DB gives special attention
to Muslim communities living in non-member countries. The Bank has so far
provided US$170 million to over 285 educational and health projects in 63
Muslim Communities.
TECHNOLOGY TRANSFER
The Bank has also contributed
towards technology transfer. In 1984, it set up a Special Technical Cooperation
Programme in order to provide technical assistance to member countries for
capacity building and exchange of information. In 1991, the Bank also set up a
Special Scholarship Programme in science and technology for outstanding
students.
The Bank is always striving to
face the challenges of future. It is playing an active role in meeting
development needs of its member countries.
To celebrate the Silver Jubilee
of Islamic Development Bank, Pakistan Post Office is issuing a commemorative
postage stamp of Rs 5 denomination on September 18, 1999.
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