KAFALAH Kafalah is the guarantee for a loan and all loans must be repaid in due course according to Islamic law. The law allows the lenders to demand some sort of security for the loan in the cases where the borrower fail to repay the loan. In international trade and finance, kafalah plays an important role in facilitating trade across border by which the bank is asked as a guarantor of payment in the international trade transaction. Islamic banks are able to offer bank guarantee, standby letter of credit and shipping guarantee using the concept of kafalah. 4. the Islamic Bank Guarantee is returned to the Islamic bank. Parties to the contract perform services and/or honour the underlying contract. 2. 3. . Islamic Bank Guarantee (IBG) 1. The customer requests issuance of an Islamic Bank Guarantee from the Islamic bank. Upon completion of the contract barring any claims. CIMB Islamic bank will issue the Islamic Bank Guarantee to the beneficiary based on the kafalah principle. 636%flat rate IBG Commission = RM 100.000 x 0.636% x 9months = RM 5. Calculation of Islamic Bank Guarantees commission based on CIMB Islamic Bank: IBG Amount : Assume at RM 100.724 .000 IBG Tenure : 9months IBG Commission rate : 0. While. The customer will then present the Islamic Shipping Guarantee to the beneficiary 4. CIMB Islamic Bank issues the Islamic Shipping Guarantee. the beneficiary releases the goods to the customer. The customer will request the issuance of an Islamic Shipping Guarantee. 2. 5. . 3. The customer redeems the Islamic Shipping Guarantee from the beneficiary and returns the Islamic Shipping Guarantee to CIMB Islamic Bank for the cancellation.Islamic Shipping Guarantees (ISG) 1. 000 x 0. Calculation of Islamic Shipping Guarantees commission based on CIMB Islamic Bank: ISG Amount : Assume at RM 100.000 ISG Tenure : 3months ISG Commission rate : 0.106% = RM 106 .106% flat rate ISG Commission = RM 100. and conditions of the trade agreement. Sell the goods without delay. Certainty of getting paid or compensated if the counterparty defaults on the agreement.Comparison between ISG & ISB Islamic Shipping Guarantees (ISG) Islamic Bank Guarantee (ISB) Benefits: Benefits: Take delivery of goods immediately.0% per annum - Minimum RM53 Min RM106* (*Min RM212 for BG-i favouring Immigration) . Upon Issuance: Issuance and Amendment: 0.106% flat on Invoice value for 3 months – Min 0.636% up to max 2. You can take delivery of goods immediately Avoid excessive storage and demurrage The possibility to negotiate better terms port charges.