Dhaka, Bangladesh (BBN) – The central bank of Bangladesh will allow an Islamic money market to manage liquidity of the Shariah-based Islamic banks properly, a top official of the central bank told BBN in Dhaka.
“The issue was discussed at a meeting with chief executive officers and managing directors of seven Islamic banks at the central bank on June 20,” the central bank official added.
The Shariah rules cannot permit payment or receipt of interest by any individual or institution.
Currently, some Islamic banks are using their surplus funds among them through an unofficial money market.
Under the existing rules, Islamic banks maintain 11.50 per cent statutory liquidity ratio (SLR) instead of 19 per cent for conventional banks as they cannot participate in the treasury bills’ auction and cannot buy any interest-bearing government bonds that involve receipt of interest.
“We’re now working on the issue,” another official of the Bangladesh Bank (BB) said, adding that such a money market would create a new window for investment of the Islamic banks’ surplus liquidity.
The Islamic banks may also invest their surplus funds in the Islamic bonds that are transacted in accordance with the principles of Islamic rules and regulations.
Currently, seven private commercial banks out of 30 are operating under the Islamic Shariah. The banks have their own Shariah Councils to dictate terms of banking under Islamic rules and regulations.
The banks are Islami Bank Bangladesh Limited (IBBL), Al-Arafah Islami Bank Ltd., Export Import Bank of Bangladesh Ltd., Social Islami Bank Ltd., Shahjalal Islami Bank Ltd., First Security Islami Bank Ltd. and ICB Islamic Bank Ltd.
Besides, a good number of local and foreign banks have introduced Islamic banking branches and windows, the central bank official added.
BBN/SSR/AD-28June11-10:05 pm (BST)