BANKERS TRADE CREDIT TAKAFUL

Bankers Trade Credit Takaful (BTCT) is a Credit Takaful designed to protect the Islamic Financial Institutions (IFIs) against the risk of non-payment by their exporters, arising from default by the overseas buyers. The facility is available against a trade finance facility on trade terms, such as Open Account, Documentary Collection and/or Letter of Credit.

Types of product:

  • BTCT (Export)
  • BTCT (Import)
Detailed information can be obtained from the Product Disclosure Sheet

Among the Salient features of BTCT:
 
Export
 
Shariah Contracts
The Shariah contract applicable to Trade Credit Takaful is Wakalah-Mudarabah
Risk Covered
Commercial Risks:
  1. Protracted default of Buyer/Exporter
  2. Insolvency of Buyer/Exporter
  3. Non-honouring of the LC
Country & Political Risks:
  1. Transfer risk
  2. Occurrence of war, revolution and civil disorder
  3. Default by public buyer (Government-owned)
Types of Cover
  1. Advances given to Exporter against evidence of shipment of the goods for export
  2. Financing of export receivables
  3. Non-reimbursement of ILC proceeds by overseas issuing banks due to insolvency, default, war, civil disturbances and transfer delay (for LC Cover)
  4. Cover shall be given to financing of Shariah-compliant purposes
Minimum Cover
Minimum cover for each exporter of RM100,000 or its equivalent in foreign currency.
Percentage of Cover
  1. 70% of Export bill or advances to the Exporters
  2. 95% of LC value
Payment Terms
Irrevocable Letter of Credit (ILC), Documents Against Payment (DP), Documents Against Acceptance (DA) and Open Account (OA).
Contribution Rate
Contribution rate is determined based on:
  1. Terms of payment
  2. Market Grading
  3. Trading and Claim experience
  4. Whole turnover or selective policy
Eligible Advances
  1. Advances by IFIs by discounting/purchase/negotiation of export documents
  2. Advances by IFIs against export bill sent on collection
Ineligible Advances
  1. Advances to indirect exporter
  2. Financing charges payable by Exporter
  3. Non-trade transaction, i.e. projects or contract for services
  4. Advances not related to export
Eligible Institutions
  1. Local Islamic Banks
  2. Locally-Incorporated Foreign Islamic Banks
  3. Bank-backed Factoring companies incorporated under the Companies Act 1965 with at least 51% shares owned by a Financial Institution and has been three (3) years in Trade Finance Business
Eligible Exporter/ Importer
  1. Companies registered under Companies Act 1965 and must be direct exporters
  2. NRCC is included
Eligible Buyer
  1. Private Limited Companies or its equivalent
  2. Must be in business for more than two (2) years
  3. No adverse record
  4. Paid-up capital of not less than USD100,000 or its equivalent. Net tangible worth not less than USD100,000
  5. Buyer country must not be off-cover country
Eligible Transaction
Against advances given by IFI for discounting or negotiating of export/import document. LC must not be from off-cover country
Fee and Charges
  1. CLA fees (Pre-Checking): RM250 per buyer
  2. CLA fees: RM250 per buyer
Certificate Period
The Certificate is issued for 12 months or other period acceptable by EXIM Bank and is renewable yearly.
Commencement of Cover
Risk exposure commences when the goods are shipped to Overseas Buyer.

 

Import
 
Shariah Contracts
The Shariah contract applicable to Trade Credit Takaful is Wakalah-Mudarabah
Risk Covered
Commercial Risks:
  1. Insolvency of the local buyer/ Malaysian Importer
  2. Protracted default of the local buyer/Malaysian Importer
Types of Cover
  1. Advances given to Importer against LC or Documentary Collection
  2. Invoice Financing
  3. Cover shall be given to financing of Shariah-compliant purposes
Minimum Cover
Minimum cover for each exporter of RM100,000 or its equivalent in foreign currency
Percentage of Cover
Up to 90% of loss suffered
Payment Terms
Irrevocable Letter of Credit (ILC), Documents Against Payment (DP), Documents Against Acceptance (DA) and Open Account (OA).
Contribution Rate
Contribution rate is determined based on:
  1. Terms of payment
  2. Market Grading
  3. Trading and Claim experience
  4. Whole turnover or selective policy
Eligible Advances
Advances by IFI on import of Strategic goods
Ineligible Advances
  1. Financing charges payable by Importer
  2. Non-trade transaction
  3. Import of non-strategic goods
Eligible Institutions
  1. Local Islamic Banks
  2. Locally-Incorporated Foreign Islamic Banks
  3. Bank-backed Factoring companies incorporated under the Companies Act 1965, with at least 51% shares owned by a Financial Institution and has been three (3) years in the Trade Finance Business
Eligible Exporter/ Importer
  1. Companies registered under the Companies Act 1965 and must be direct exporter
  2. NRCC is included
Eligible Buyer
  1. Malaysian companies registered under the Companies Act 1965, inclusive of Non-Resident Controlled Companies
  2. The buyer must have at least a paid-up capital of a minimum of RM100,000
  3. At least three (3) years in business operation
  4. Minimum sale of RM1.0 million
  5. No adverse track record
Eligible Transaction
Against advances given by IFI for discounting or negotiating of export/import document. LC must not be from off-cover country.
Fee and Charges
CLA fees: RM50 per buyer
Certificate Period
The Certificate is issued for 12 months or other period acceptable by EXIM Bank and is renewable yearly.
Commencement of Cover
Risk exposure commences upon the delivery of the goods to Domestic Buyer.