Islamic banking: SBP to purchase, sell Ijara Sukuk via OMOs

Banks with Islamic branches eligible to participate.

KARACHI:

In order to facilitate Islamic banking industry in their liquidity management and effective transmission of monetary policy, the State Bank of Pakistan (SBP) has decided that it may outright purchase or sell government of Pakistan Ijara Sukuk (GIS).

This would be done on either a deferred payment basis (Bai-Muajjal) or ready payment basis through Open Market Operations (OMOs) based on the multiple price competitive bidding auction process.

All Islamic banks and conventional banks having Islamic branches will be eligible to participate in these OMOs, the SBP said on Thursday.

The SBP will issue notice for the OMO through Reuters and Bloomberg, it said. To participate in the OMOs, all eligible participants will send their bids through fax/Reuters, detailing the face value of the security and deferred price (in case of Bai-Muajjal) or the price in case of ready payment basis. The price should include accrued profit and can be quoted up to four decimal places.



Each eligible participant will be allowed to submit maximum three bids in an OMO. The minimum bid size will be Rs25 million and its multiple thereof. The SBP will have the discretion to accept bids on a ‘pro-rata volume’ basis, it added.

Published in The Express Tribune, October 17^th, 2014.

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