Islamic Development Bank
Understanding Islamic Banking

The Islamic Development Bank (IDB) was founded on December 18, 1973, and is headquartered in Jeddah, Saudi Arabia. The bank has fifty-six shareholding member states. In this video, Mohammed Tariq, the Head of Treasury for the IDB, talks about how to raise capital the Islamic way. Tariq says: “I think of course you can have equity as known in the conventional market as well. Of course the issue is that he party raising the money must have Sharia-compliant business, so that’s one. As a component of the debt market they can borrow directly, but that will be an actual debt which cannot trade. So you can raise money. And of course in the case of Islamic way of doing things you do not actually lend money, you give money to actual economic activity, which tends to be project finance. So the money should be deployed for certain purpose, and hence the money can be provided different ways.”

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Submitted by: Ilana Faber
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