UAE Central Bank expands Islamic banks' access to its funds

The UAE Central Bank said it was making it easier for Islamic banks to accessits special lending facility by expanding the range of collateral they can use.

From April 1 Islamic banks, which account for roughly aquarter of banking assets in the UAE, will be allowed to use Sharia-compliant securities other than central bank-issued Islamic certificates of deposit to borrow overnight from the central bank's Collateralised Murabaha Facility.

The expansion of the collateral will permit Islamic banks toobtain central bank liquidity in the same way that conventionalbanks do from the Interim Marginal Lending Facility, which waslaunched last July, the central bank said in a statement onTuesday.

From April 1, eligible collateral will range from sukuk issued by foreign governments, which must have a minimumlong-term credit rating of A, to UAE corporate entities and even some sukuk which are rated below investment grade or do not have ratings, at the central bank's discretion.

Follow Emirates 24|7 on Google News.