The Second Islamic Finance Ministers' Conference, held in Jeddah, Saudi Arabia, on August 10, 1974, adopted and opened for signature the Agreement establishing an Islamic Development Bank (IsDB). The Agreement entered into force on April 23, 1975. The inaugural meeting of the Board of Governors was held in Riyadh, Saudi Arabia, in July 1975, and the Bank commenced operations on October 20, 1975. Membership in the Bank is open to all countries that are members of the Organization of the Islamic Conference (OIC).

The main objective of the Bank is to foster economic development and social progress of member countries and Muslim communities individually as well as jointly in accordance with the principles of the Shariah.

The Bank maintains close relations with the Organization of the Islamic Conference and its various organs and affiliated bodies, especially the OIC Standing Committee for Economic and Commercial Cooperation (COMCEC), in order to strengthen economic cooperation among the OIC member countries.

As decided at the 26th Annual Meeting of the IsDB Group held in Algiers, Algeria in November, 2001, the authorized capital of the Bank was increased from 6 billion Islamic Dinars to 15 billion Islamic Dinars Its subscribed capital also was increased, from 4.1 billion Islamic Dinars to 8.1 billion Islamic Dinars, payable according to specific schedules and in freely convertible currency acceptable to the Bank. The Islamic Dinar, which is the unit of account of the Bank, is equivalent in value to one SDR of the International Monetary Fund. On April 5, 1982, the Bank was prescribed by the IMF as a holder of SDRs, and thus authorized to acquire and use SDRs in operations and transactions with participants in the IMF's SDR Department and other holders under the same terms and conditions as participants.

The Bank finances projects in its member countries through a number of modes of financing, which are compatible with the Islamic Shariah. These modes of financing are interest-free loans, equity participation, leasing, installment sale, profit sharing and Istisnaa. In addition, the Bank also supports the development efforts of its member countries by providing technical assistance and promoting technical cooperation among them.

The Bank has been active in the promotion of trade and the flow of investments among its member countries. This is being done through various schemes such as the Investment Deposit Scheme, the Islamic Banks' Portfolio (IBP), and the Unit Investment Fund (UIF) to mobilize resources from the private sector.

The Bank maintains a Special Assistance Fund, which is utilized to assist member countries afflicted by natural calamities and to finance health and educational projects aimed at improving the socio-economic conditions of Muslim communities in non-member countries.

With a view to undertaking research for enabling the economic, financial, and banking activities in Muslim countries to conform to Shariah and to extend training facilities to personnel engaged in economic development activities in member countries, the Bank established the Islamic Research and Training Institute (IRTI), which became operational in 1983. The IRTI undertakes research, conducts training, publishes studies, and organizes conferences on Islamic economics and Islamic banking, and other related areas. In order to encourage research in Islamic economics and Islamic banking, the Institute also undertakes the awarding of the Bank's prizes for Islamic Economics and Islamic Banking.

The Bank established the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) with an authorsed capital of US$150 million to promote trade and the flow of investments among member countries of the OIC. The objective of the Corporation is to provide export credit insurance or insurance or reinsurance against commercial and political risks.

In 1998 the Bank launched a US$1.5 billion IDB Infrastructure Fund to invest in infrastructure projects, mainly power, telecommunications, transportation, energy, natural resources, petro-chemical and other infrastructure-related sectors in member countries. The Fund is expected to provide a platform to structure long-term financial products to meet the needs of investors seeking Shariah-compatible instruments as well as the financing needs of infrastructure projects.

In November 1999, the Board of Governors approved the establishment of an Islamic Corporation for the Development of the Private Sector (ICD) with an authorized capital of US$1 billion and paid up capital of US$500 million. Thirty three member countries have so far ratified the Articles of Agreement establishing the Corporation. The goal of the corporation is to promote the development of the private sector in accordance with the principles of Shariah. The Corporation is expected to play a major role in supplementing the IDB Group role in private sector development in member countries.

COMPOSITION

55 members: Afghanistan, Albania, Algeria, Azerbaijan, Bahrain, Bangladesh, Benin, Brunei Darussalam, Burkina Faso, Cameroon, Chad, Comoros, Côte d'Ivoire, Djibouti, Egypt, Gabon, The Gambia, Guinea, Guinea-Bissau, Indonesia, Islamic Republic of Iran, Iraq, Jordan, Kazakhstan, Kuwait, Kyrgyz Republic, Lebanon, Libya, Malaysia, Maldives, Mali, Mauritania, Morocco, Mozambique, Niger, Oman, Pakistan, Palestine, Qatar, Saudi Arabia, Senegal, Sierra Leone, Somalia, Sudan, Suriname, Syrian Arab Republic, Tajikistan, Togo, Tunisia, Turkey, Turkmenistan, Uganda, United Arab Emirates, Uzbekistan, Yemen

STRUCTURE

Each member country is represented on the Board of Governors by a Governor and an Alternate Governor.

The Board of Executive Directors is composed of 14 members, of whom seven are appointed by each of the seven member countries having the largest number of shares, and the remaining seven are elected by all other Governors. The term of the Executive Directors is three years, which can be renewed. The President of the Bank acts as Chairman of the Board.

The President, who is responsible for day-to-day operations, is elected by the Board of Governors for a term of five years, which can be renewed. He is assisted by three Vice Presidents appointed by the Board of Executive Directors on his recommendation.