Dubai Islamic Bank in funds deal with ministry
Dubai, February 7, 2010
Dubai Islamic Bank has signed an agreement with the UAE's ministry of finance, which grants the lender capital to provide sharia-compliant products.
The finance ministry has granted to Dubai Islamic Bank "the wakala capital for the purpose of providing sharia-compliant financing or products and to stimulate the economic activity in the UAE," a statement on the Dubai Nasdaq website said. It did not give the value of the deal.
The statement said most other national banks had signed similar agreements with the ministry.
Wakala is an agency structure where a depositor authorises an agent to invest his funds in sharia-approved assets.
The Islamic lender's board of directors plans to meet on February 10 to approve the wakala agreement.
If Dubai Islamic Bank breaches the wakala terms and conditions, the ministry has the right "to convert all or part of the outstanding wakala capital... which would result in a capital increase of the bank", the statement said. - Reuters