Dubai Islamic Bank has launched the latest in its series of Shariah-compliant structured products. The three-year capital-protected Global Diversified Note is linked to a basket of global equities, currencies, commodities and real estate. The note has a fixed return of 7% in the first year and pays variable coupons thereafter.

Minimum investment is $10,000.

The bank’s head of Shariah structuring, documentation and product development, Sohail Zubairi, recently wrote in local publication Gulf News of the challenges faced by the Islamic banking and finance industry as it experiences exponential growth.

The foremost challenge is the urge by some to ‘Islamise’ each and every product offered by conventional banking, he said: “This threatens to dilute Shariah principles in the financial transactions claimed to have been structured Islamically… For example, at times I marvel at the idea by some institutions to launch an Islamic personal loan as a retail banking product.”

He then turned his attention to the difficulty in finding alternatives forward currency and commodity contracts, options, derivatives and so on. These conventional treasury products have a common element – the deferment to a future date of both the delivery and the payment of price, said. “This is prohibited in Sharia as it permits to either defer the delivery or the price but not both at the time of entering into a contract.”

Despite these difficulties, the bank is committed to developing its structured products business locally as it ‘aggressively’ expands its network to 53 branches throughout the UAE by the end of 2007.