KARACHI, June 12: Agreement for the first largest Shariah-compliant financing transaction was signed here on Tuesday and mandate to arrange Rs8.5 billion funding was awarded to Meezan Bank and Habib Bank.

Dawood Hercules Chemicals Limited (DHCL) became the first big industrial group which decided to acquire funding through Islamic banking products.

The financing will be arranged through multiple structures each specifically tailored to meet the specific objectives of the company and institutions extending the facilities.

President and CEO Meezan Bank Ltd Irfan Siddiqui, President Habib Bank Ltd Zakir Mahmood and Chairman Dawood Group Hussain Dawood signed the agreement on behalf of their respective organisations. Justice Rtd Taqi Ahmad Usmani was also present on the occasion.

“We will provide the funding through two Islamic products ‘Diminishing Musharaka’ and ‘Murabaha’ for short-term working capital,” Meezan Bank CEO Irfan Siddiqui told Dawn.

The HBL and Meezan Bank Ltd are the lead arrangers, whereas Meezan Bank Ltd will act as Shariah Structuring Agent for this transaction.

“Money is ready and by end of this month, the Dawood Group will withdraw Rs4 billion out of the total Rs8.5 billion,” Mr Irfan added.

He said that his bank would provide about Rs2 billion for this transaction.

He said more industrial groups were ready to avail the opportunity of funding through Islamic products.

Dawood Chemical has awarded the mandate with the objective of converting its financing arrangements conforming to Shariah principles.

The transaction is the first step by the Dawood Group towards its stated objective of propagating Islamic Banking. The group had also started Islamic banking through Dawood Islamic Bank but failed to run the bank, which was sold out.