The letter of credit (LC) is one of the most reliable instruments in international trade. But for Muslim business owners, ensuring a safe transaction is not enough — the entire process must also comply with Islamic Shariah.
On a special episode of “Islamic Economics” on Somoy Television, supported by Prime Bank Hasanah Islamic Banking, experts discussed the intersection of international trade finance and Islamic principles.
A.K.M. Mizanur Rahman, deputy chief of Islamic banking at Eastern Bank PLC, explained the LC process: after a contract between buyer and seller, the importer opens an LC through a bank. Once the exporter ships the goods and submits the required documents, the bank verifies and releases payment. A confirmed LC can provide additional payment security.
He warned that risks in the LC system include document errors, fraud, disruptions from war or political instability, and the possibility of money laundering through under- or over-invoicing. Mitigating these requires skilled personnel, proper price verification, and reliable exporters.
He added that improving LC transparency in Bangladesh requires both building capacity within banks and establishing a centralized international market price verification system under Bangladesh Bank’s supervision.
Mufti Lukman Hasan, a member of the AAOIFI Takaful Working Group in Bahrain and an Islamic scholar, said that for an LC to be halal under Shariah, it must be free of riba (interest), gharar (excessive uncertainty), and involvement in haram (prohibited) goods. He emphasized that Islamic banking alternatives such as murabaha (cost-plus financing) and wakalah (agency contracts) can replace conventional interest-based LC mechanisms while maintaining Shariah compliance.
বাংলায় মূল প্রতিবেদন পড়ুন · Read the original Bengali report