Bank of Bahrain launches new Sharia-compliant instrument

GMT 12:17 2015 Wednesday ,01 April

Arab Today, arab today Bank of Bahrain launches new Sharia-compliant instrument

Central Bank of Bahrain (CBB)
Manama - BNA

As part of ongoing efforts towards the development of Islamic banking and promoting liquidity management for Islamic retail banks, the Central Bank of Bahrain (CBB) launched a new Sharia-compliant Wakalah liquidity management instrument.
This instrument, which was approved by the Sharia Board of the CBB, is aimed at absorbing excess liquidity of the local Islamic retail banks and place it with the central bank. The instrument has been developed, based on a standard contract of the International Islamic Financial Market (IIFM).
Wakalah is an investment opportunity for retail Islamic banks who wish to deposit excess liquidity with the CBB. Retail Islamic banks need to sign a Wakalah agreement which appoints the CBB as an agent (Wakil) to invest cash on behalf of the bank (Muwakkil). Accordingly, the Wakil will invest these funds in the investment portfolio allocated in advance, and contains Islamic Sukuk. The duration of the Wakalah is one week and is available for Islamic retail banks every Tuesday.
Shaikh Salman bin Isa Al Khalifa, Executive Director of the Banking Operations of the CBB said the central bank had worked recently to develop this service for the Islamic retail banks in order to invest excess funds with the Central Bank, similar to those carried out by conventional banks. This service is a new product in Islamic banking and reconfirms Bahrain's commitment to develop Sharia compliant products to serve the growing Islamic Banking industry.

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