Tokyo — Bank of Tokyo-Mitsubishi UFJ of Japan becomes the first-ever Japanese bank to start offering shariah-compliant loans through an overseas branch.
Its branch in Dubai will issue a $200 million loan to a unit of Saudi Arabian national mining company Ma’aden. Since Islamic law forbids both the charging and payment of interest, the bank will instead reap gains on transactions in commodities, such as iron and aluminum.
The Mitsubishi UFJ Financial Group bank sees Islamic credit making up about 15% of its Middle East financing in the next three years.
Japanese banks had been allowed to engage in Islamic finance only through units incorporated overseas. But the Financial Services Agency (FSA) loosened its rules last April to let them use foreign branches as well.