SBP developing Islamic instruments

KARACHI: Acting Governor State Bank of Pakistan Yaseen Anwar has said the central bank is working with stakeholders to develop Islamic instruments which will provide some flexible and convenient mechanism for managing surplus liquidity in the Islamic banking industry.

He was speaking at a talk by Dr Zamir Iqbal, a renowned scholar on Islamic finance, on ‘What needs to be done for Islamic finance to succeed’ at the State Bank of Pakistan on Tuesday.

Anwar said Islamic banking institutions (IBIs) are facing the issue of short-term liquidity management. “This not only adversely impacts profitability of the IBIs but also inhibits aggressive deposit mobilisation by them,” he added.

However, he said with the development of Shariah-compliant instruments, this problem will be resolved and they will also be instrumental in the development of an Islamic interbank money market besides providing a platform for developing a benchmark for pricing of Islamic finance products.

Published in the Express Tribune, June 16^th, 2010.