KUALA LUMPUR -- Mizuho Bank Malaysia on Monday opened a $300 million credit facility to the Islamic Corporation for the Development of the Private Sector, or ICD.
The two-year deal will finance projects in the member countries of ICD, the private sector arm of Islamic Development Bank Group. The Jeddah-based multilateral group serves 52 Islamic countries and five public financial institutions largely in the developing world.
The $300 million accounts for 24% of funding programs earmarked by ICD in 2017, ICD Chief Executive Khaled Al Aboodi told reporters at the signing ceremony. ICD spends on average $20 million per project.
Established in 1999, ICD supports economic development of its member countries by offering credit lines.
"Funds could be disbursed for hospitals in Gambia, manufacturing facilities in Tajikistan or trade finance in Maldives," said Al Aboodi.
For Mizuho Bank Malaysia, a unit of Japan's Mizuho Bank, the deal marks its maiden cross-border bilateral Islamic facility based on the concept of Murabahah in which both the creditor and debtor agree on an underlying asset with the cost and profit margin disclosed.
"This transaction will further strengthen our capacity to develop our Shariah-compliant business," said Shinichi Nishiyama, Mizuho Bank Malaysia's deputy CEO.
Lending to ICD will also expose Mizuho Bank Malaysia indirectly to the markets in Islamic countries. Nishiyama says the bank is looking forward to a "long-term partnership" with ICD, which has a regional office in Kuala Lumpur.
Islamic finance, which is based on Shariah or Islamic laws, prohibit the charging of interest. Instead, parties deriving income from profit and loss-sharing.