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Islamic fund launched to aid smaller tunisia firms

´╗┐Feb 14 Tunisia plans to provide Islamic financing to small and medium-sized enterprises (SMEs) via a tie-up between the public and private sectors, which could serve as a model for other Arab states trying to repair their economies after political turmoil. The Tunis-based Bank of Financing Small and Medium Enterprises (BFPME) has agreed with the Jeddah-based Islamic Corporation for the Development of the Private Sector (ICD), a private investment arm of the Islamic Development Bank, to aid smaller companies in Tunisia. The plans include a 50 million dinar ($32.3 million) sharia-compliant SME fund. It was launched on Wednesday by Tunis-based United Gulf Financial Services - North Africa (UGFS-NA), which is 60 percent owned by Bahrain-based United Gulf Bank.

"The success of the fund will serve to increase foreign direct investment and further develop Islamic banking in the country," UGFS-NA chairman Mohamed Fekih said in a statement.

The fund, financed by the ICD and the Tunisian government's Deposit and Consignment Fund, will focus on urban areas, and hopes its investments will create up to 1,000 new jobs. The plans also call for the ICD to assist BFPME, which has a capital of 100 million dinars, in developing Islamic lending products tailored for SMEs.

Islamic finance, which is structured to obey religious principles such as a ban on interest, is gradually expanding in North Africa as governments promote it in the wake of the 2011 Arab Spring uprisings, which ousted regimes that neglected or discouraged the industry for ideological reasons. The Tunisian government is working on a legal framework to cover issues of Islamic bonds, and a draft may be discussed by authorities as early as this month, a source at the ministry of finance told Reuters.

Kuwait finance house rejects investment dars debt for assets plan

´╗┐DUBAI Feb 11 Kuwait Finance House (KFH), the Gulf state's largest sharia-compliant bank by assets, said it had rejected a debt-for-assets deal proposed to creditors by Investment Dar, another Kuwaiti sharia-compliant lender. In a statement on Wednesday, KFH said it would take all legal measures available against Investment Dar to try to collect the debt it was owed. It didn't specify a monetary sum.

After overextending itself during the boom years of the mid-2000s, Investment Dar has been seeking to cut its debts in the wake of the global financial crisis.

It outlined its latest debt restructuring proposal to creditors ahead of a meeting with them on Jan. 21. Investment Dar, best-known for its stake in luxury carmaker Aston Martin, said on Nov. 18 that it had received the backing of a "significant majority of investors" for the proposal, which would see creditors voluntarily exchanging debt for ownership of a portfolio of assets.

The proposal, first made last May but amended with new terms in June, is an alternative to a 1 billion dinar