JAKARTA: Indonesia is introducing a tool that will enable Islamic lenders to earn returns on excess cash as part of the Southeast Asian nation's bid to bolster syariah-compliant banking assets by 35 per cent in 2011.
The instrument - to debut next month - will allow banks to buy and sell commodities such as palm oil, coal and cocoa at an agreed profit margin, while still complying with Islam's ban on interest. (source)
The instrument - to debut next month - will allow banks to buy and sell commodities such as palm oil, coal and cocoa at an agreed profit margin, while still complying with Islam's ban on interest. (source)
The Jakarta Futures Exchange will provide a platform for the transactions, known as commodity murabahah, after the National Sharia Board approved the contracts on August 5, the exchange said in a statement issued this week.
"Instead of just parking idle funds in sukuk, or with Bank Indonesia, we can use commodity murabahah for interbank lending," Hanawijaya, director at Jakarta-based PT Bank Syariah Mandiri, Indonesia's largest Islamic lender, said in an interview on August 8.
"If we're able to manage liquidity more efficiently that will lower our cost of funds, allow us to be more competitive and boost returns."
Indonesia joins Malaysia and Persian Gulf countries such as Saudi Arabia, the United Arab Emirates and Bahrain in offering the transactions.
The move is a "step forward" and will spur growth in the syariah-compliant industry, which Indonesia wants to bolster to 135 trillion rupiah (RM49.14 billion) this year, Mulya Siregar, director of Islamic banking at the central bank, said in an interview on August 8.
Indonesia joins Malaysia and Persian Gulf countries such as Saudi Arabia, the United Arab Emirates and Bahrain in offering the transactions.
The move is a "step forward" and will spur growth in the syariah-compliant industry, which Indonesia wants to bolster to 135 trillion rupiah (RM49.14 billion) this year, Mulya Siregar, director of Islamic banking at the central bank, said in an interview on August 8.
Indonesia has 11 full-fledged syariah-compliant lenders and 23 banks that offer Islamic financial services. - Bloomberg
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