Islamic banks : State Bank increases liquidity requirement

Now SLR has become same for conventional and Islamic banks at 19%.

KARACHI:

The State Bank of Pakistan (SBP) has increased the Statutory Liquidity Requirement (SLR) for Islamic banks and Islamic banking branches by five per cent with effect from June 3, a central bank announcement said on Wednesday.

At present, SLR for Islamic banks and Islamic banking branches is 14 per cent (excluding cash reserve requirement) of total demand liabilities including time deposits with period of less than one year.

Now SLR would be 19 per cent of total demand liabilities, SBP said, adding time liabilities including time deposits with period of one year and above would not require any SLR. With this decision, SLR for conventional and Islamic banks will be the same at 19 per cent.

SLR can be maintained in the form of cash in hand, balance with the National Bank in current account, balance with SBP in current account and un-encumbered approved securities.

Moreover, SBP said, all holdings of government’s Ijara Sukuk would be fully counted for SLR purpose. Holdings of SBP-approved SLR-eligible public sector Sukuks will also be counted up to seven per cent of total time and demand liabilities for SLR purpose.

Published in The Express Tribune, April 28^th, 2011.