JAKARTA: Bank Indonesia invites foreign banks to inter-bank money market based on Islamic principles, expanding the pool of participants, and allow transactions using brokerage.
The central bank also relaxes the regulation of sharia-based money market by allowing transfer of ownership of instruments through sale and purchase agreement. (source)
The central bank also relaxes the regulation of sharia-based money market by allowing transfer of ownership of instruments through sale and purchase agreement. (source)
Moreover, Bank Indonesia issues a new instrument that can be used as guarantee in sharia-based inter-bank money market, namely sharia-based commodity futures certificate, which is proof of commodity trading in the market.
This is regulated in the revised Bank Indonesia Regulation 14/1/PBI/2012, which replaces PBI No. 9/5/PBI/2007 on Sharia-Based Inter-Bank Money Market.
Bank Indonesia also announced new guidelines through three Notification Letters, namely SE No. 14/1/DPM on Sharia-Based Inter-Bank Money Market, SE No. 14/02/DPM on Inter-Bank Mudharabah Investment Certificate, and SE No/ 14/3/DPM on Inter-Bank Sharia-Based Commodity Future Certificate. Those provisions take effect on January 4, 2012.
Article 2 of the revised regulation states that foreign banks may make transactions in the sharia-based inter-bank money market. This expands the number of categories traders in the sharia-based inter-bank money market into four, namely sharia banks, sharia units, conventional banks, and foreign banks.
Conventional and foreign banks are only allowed to place funds in issuing instrument in the sharia-based inter-bank money market. Meanwhile, general sharia banks and sharia units may both place and receive funds.
However, if sharia banks and sharia units place funds by using the instruments issued by foreign banks, they must comply with the sharia principles.
Bank Indonesia also allows banks to trade using brokerages both in rupiah and in foreign currencies in the sharia-based money market as regulated in Article 2 Paragraph 2. Brokerages may make transactions only under the name of money market participants and must comply with the central bank rules.
Additional instruments
To make instruments in sharia-based money market more liquid, Bank Indonesia allows transfer of ownership of the instruments in the money market before due date through sale and purchase agreements. The seller of instrument in the sharia money market may promise (al wa’ad) to buy back at a certain price settled initially.
The central bank also adds an instrument, namely sharia-based commodity futures certificate called SiKA. The instrument is based on commodity transactions in markets based on Islamic principles using sale and purchase agreement (akad murabahah).
Previously, inter-bank mudharabah investment certificate was the only instrument traded in sharia-based inter-bank money market. Mudharabah is a profit-sharing system between cooperating parties, in which one party invests a sum of money and the other manages the investment.
The new instrument using commodity futures poses a good chance for the sharia banking to grow, BNI Syariah Director Bambang Widjanarko.
“We think it as a good option because there's a new investment instrument to absorb excessive liquidity,” he said..
Foreign banks' involvement in the Islamic-based inter-bank money market is positive for the industry, which is smaller than the conventional banking industry, he said. (T04/NOM)
No comments:
Post a Comment