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The Bangladesh Bank has sanctioned Tk 5,250 crore in liquidity support in the past two days after it has introduced a financial instrument named Islamic banks liquidity facility for the Shariah-based banking system in Bangladesh.
The central bank issued Tk 4,000 crore in liquidity support to five banks on Tuesday and Tk 1,250 crore to two banks on Wednesday, a BB official said.
The BB on December 5 launched the facility to facilitate providing short-term liquidity for the Shariah-based banks.
BB officials said that the central bank would continue giving support of liquidity to the Islamic banks as per their needs.
They said that there was no liquidity shortage in the banks.
However, some banks may require money on an emergency basis that could be fulfilled through the facility, they said.
Currently, there are 10 full-fledged Islamic banks in the country.
Shariah-based banks maintaining current accounts with the Bangladesh Bank will be eligible to participate in the IBLF, the BB circular issued on December 5 said.
The IBLF is a framework of providing liquidity facility by the BB to Shariah-based banks under the Mudarabah contract where the central bank acts as the investor (Rab al Mal) and banks act as the investment manager (Mudarib) under an agreed profit sharing ratio, it said.
Tenor of the IBLF will be 14 days.
The profit rate will be three months MTDR (Mudaraba term deposit receipt) rate of the respective bank.
Unencumbered Bangladesh government investment Sukuk (BGIS) will be eligible securities. The applicable hair-cut of the collateral security for the IBLF must be 5 per cent of its face value.
The institutions will receive interim profit, if there is any, from the BGIS used as collateral for the IBLF.
The applied amount of the IBLF should be for a minimum amount of Tk 1 crore, or multiples thereof.
The IBLF will be provided according to the decision of auction committee of the BB.
(NA)
