Al Salam Bank-Bahrain has signed an agreement with the Bahrain Bourse and Central Bank of Bahrain (CBB) to offer an innovative new Shari’a-compliant brokerage service, which allows for the use of Bahrain-issued Ijara Sukuk as the underlying asset in Murabaha financing frameworks. The innovative new structure meets a growing demand for Shari’a-compliant alternative financing solutions, which has prompted a rise in global Sukuk issuances.
The Bahrain Bourse and CBB have partnered with banks to create a local Shari’a-compliant trading framework using CBB-issued sukuk as the underlying asset. The new framework means local banks are no longer exclusively reliant on pre-traded commodities from overseas brokers in order to comply with Shari’a standards. As well as cementing Bahrain’s position as a regional and international hub for Shari’a-compliant financing transactions, the new service will also provide significant reductions in fees for customers and in processing time for offering banks.
Commenting on the agreement, Rafik Nayed, Group CEO of Al Salam Bank-Bahrain, said: “Al Salam Bank has a proud history of leading on local innovation in Islamic Banking.
This latest service introduces a new underlying asset to our existing Murabaha financing structure, which until now has been conducted via local and international brokers.
The new product not only further diversifies the commodities available to our clients seeking Shari’a-compliant products, but also provides them with a more streamlined service as it is actioned via a digital system which significantly decreases processing time.” Shaikh Khalifa bin Ebrahim Al Khalifa, CEO of Bahrain Bourse, added: “The newly offered Ijara-based Murabaha service is set to address the growing market demand for Shari’a-compliant Ijara Sukuk, while further enhancing Bahrain’s capital market offering and creating new opportunities for investment on both a regional and global scale. Al Salam Bank has firmly positioned itself as a pioneer when it comes to innovation in Islamic Finance, and make a fitting partner for this timely and important initiative, which has the potential to further advance Islamic Banking.”—|Agencies
