News Column

Islamic Banks lack Shariahcompliant alternative of T-bills

June 25, 2014

The Islamic banking industry may have expanded swiftly in recent years, but the avenues of Shariah-compliant investments available to it remain limited.

While conventional banks can invest in an array of governmentbacked securities, ranging from long-term Pakistan Investment Bonds (PIBs) to short-term treasury bills (T-bills), Islamic banks and banks with Islamic window operations still lack a Shariah-compliant alternative of T-bills.

However, sources in the Islamic banking industry say significant progress has been made in creating a Shariahcompliant investment instrument that will help Islamic banks park their liquidity in the short term. Meezan Bank Executive Vice President Ahmed Ali Siddiqui said the Shariah board of the State Bank of Pakistan (SBP) has approved a Salam-based structure for a shortterm instrument.

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Source: National Herald Tribune (Pakistan)

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