UAE to set up fund for Islamic banks

The UAE Central Bank is said to be working on a Shariah-compliant liquidity window to help Islamic banks access their short-term funding needs.

A committee set up to look into the needs of Islamic banks in the UAE has also stated that it is working on a Shariah instrument to substitute certificates of deposits, which is used by conventional banks to park their short-term surplus funds with the Central Bank.

Mohammed Saleem, member of the committee and Executive Vice-President and Chief of Treasury, Dubai Islamic Bank, said currently Islamic banks buy CDs on 'zero' interest. The new liquidity window will address the contingency fund requirements of Islamic banks.