IslamicFinance.de

UAE (Khaleej Times) Initially, the CDs will be available only to fully Islamic banks and then extended to the Islamic banking units of other commercial banks.
The Sharia-compliant instrument, on the lines of Islamic Murabahah transaction will help soak up the excess liquidity in the Islamic money market.
A banker welcoming the move told Khaleej Times that Islamic banks with this offering can invest their surplus liquidity in Sharia-compliant certificates of deposit which will also offer them financial gains.
Malaysia, the world’s biggest market for Islamic bonds, Bahrain and Indonesia sell bills to help soak up cash in the financial system and set benchmarks for short-term bond sales. A Murabahah transaction is a sale and deferred-payment agreement based on an asset in which the cost and profit margin are pre-agreed between a bank and its customer. Transactions in Islamic finance are based on the exchange of assets rather than interest to comply with Sharia principles.