KARACHI: Islamic banks
are mulling to develop a Shariah-compliant commodity trading platform in
consultation with the Pakistan Mercantile Exchange to utilise their excess
liquidity that surpassed Rs400 billion, sources said on Saturday.
The sources said the
platform is to deal in buying and selling of commodities in the local and
international exchanges. It will be based on Murabaha-related transactions. It
will use the short-term funds of Islamic banks.
Sources, privy to the
developments, said there are various proposals under discussion regarding which
commodities should be chosen to begin with.
“Under a proposal, a bank
may buy oil from marketing companies against cash payment and then sell it on
deferred payment to a third party,” a well-placed source told The News.
“Not just that,” the
source said, “some Islamic financial players are working out modalities to
integrate the Murabaha commodity platform with international exchanges in
Dubai, London and Malaysia.”
“Of course, all such
proposals are subject to the approval from Shariah board of the SBP (State Bank
of Pakistan),” he added. The Islamic banking department at the SBP held a
meeting with the representatives of the Islamic banking institutions on
Thursday in an effort to find a solution to their liquidity management problem.
“Presently, the central
bank’s Shariah board is reviewing the suggestions received from the
stakeholders,” an official said, on condition of
anonymity.
Financial experts termed
the commodity platform proposal as feasible. “This by far is the best option
available for the banks,” a banker said. “It would be a breakthrough in
Pakistan.”
Some Shariah scholars
have, however, reservations about the prospective nature of Murabaha contract.
“The decision for this
product vests basically with the Shariah advisors first than with the
government and or the SBP,” a senior banker said. “If Shariah advisors accept
this then this will be the best thing for the local Islamic banking industry
and it will also attract investment from local and international
investors.”
Bankers said Islamic
countries like Malaysia are already using this platform, “we and our Shariah
advisors shall also take more liberal view on it.”
Islamic banks face a
shortage of Shariah-compliant short-term government securities, such as Ijara
Sukuk to deal with their huge funds. Islamic lenders seem to adopt such mode of
financing (commodity Murabaha) to invest extra funds in the absence of money
market instruments.
The SBP slashed statutory
liquidity requirement for the Islamic banks to 14 percent from 19 percent in
November last year to fix their liquidity problem. However, banks feel the
relief is a short-lived.
Deposits at Islamic banks
are continuously growing but they have dearth of avenues for investment.
The deposits of the
Islamic banks rose to Rs1.476 trillion in the third quarter of 2016 as against
Rs1.271 trillion in the same quarter of 2015.
The market share of
Islamic banking assets in overall banking industry increased to 11.8 percent in
July-September 2016 from 11.2 percent a year earlier.
The Islamic banking
industry posted a profit of Rs8.4 billion in July-September 2016 compared with
Rs6.5 billion earned by the industry during the same quarter of 2015.
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