The Sharia Rulings about Letter of Credit in Imports and Exports

Abstract

As you know Islam is permanent law of life it widely contains and provides rules, regulations and guidance for all departments of life. So Islam also provides pure guidance in a complete way to one of the most complicated and enhanced aspect of life that is Finance. On behalf of specific rules and regulations opens the door of easiness, equality and facilitations for business and financial deals with ability of safety of financial transactions over the world. One of important principle in business is Kafala. In financial matters, kafala means that if one party needs to own a debt and the other party need a trust for giving debt. Therefore, the first party provides guarantee means responsibility of paying back on due time and in case of any issues of return the guarantor will be responsible. For example in some situations merchants deals the deal in two different countries presenting the bank as a guarantor instead of individuals. The bank follows formal process named LC to become legal guarantor between parties. Following article contains different discussions like introduction of LC, its methods, types and Shariah issues related.