A bill of exchange which is drawn on or by a bank, payable at some preset future date, to securitize debt resulting from a trade transaction. Accepted bills are usually drawn to finance the trading of goods such commodities, whether from local or foreign markets on the basis of murabaha (cost-plus sale). The resulting debt would then be securitized in the form of a bill of exchange drawn by the bank and accepted by the customer. The securitization process is based on the concept of bay’ al-dayn sale of debt), and once it is carried out, the bills will trade in the secondary market at a discounted value. Accepted bills come typically in two forms: accepted bills for purchases/imports and accepted bills for sales/exports. This practices are all the common in East Asian markets (e.g., Malaysia).

From a shari’a perspective (as set out in AAOIFI shari’a standards), securitization of receivables (murabaha receivables in this case) cannot involve the sale or purchase of underlying debt except at par value (face value). Similarly, bills entitling the the holder to receive a specified amount of money from the issuer cannot be negotiated (through secondary markets). Furthermore, acceptance for paying the value of commercial papers (including bills of exchange) on the part of the drawee is an undertaking and obligation to pay the underlying debt to the holder on maturity date. However, discounting (khasm) of bills of exchange is impermissible. Also, selling a “deferred” bill of exchange (due on a future date) for its face value is impermissible (as it constitutes riba al-nasi’ah). Likewise, shari’a forbids selling a “deferred” bill of exchange (due on a future date) for more than its value (as it involves both riba al-nasi’ah and riba al-fadhl).

The Islamic accepted bill (IAB) is is equivalent to the banker’s acceptance (a conventional money market instrument). It was first introduced in 1991 as a means to provide merchants with a viable Islamic trade finance product (though controversial from a shari’a point of view).