Noriba Bank's sharia innovations

While many product providers are only now creating commodity and currency-linked structures, Bahrain-based Noriba Bank was doing it in 2003. Their products also adhere to the principles of Islamic law. By Shamillia Sivathambu

The basic principles behind Islamic banking concern its shunning of interest, or 'riba', and the equitable distribution of income and wealth. This makes most traditional option-based payoff structures impermissible under Islamic law.

However, in December 2003 Bahrain-based Noriba Bank developed a CPPI structure based on the traditional principle of Murabaha (see below) to create a product called RaMI (range Murabaha investments), linked to gold and a selection of currencies offering 100%