A major milestone has recently been achieved by Islamic Banks towards development of an interbank market for Islamic Banks.
Meezan Bank, Pakistan’s first and largest Islamic Bank recently hosted a meeting of Shariah Advisors and Product Development experts of all full fledge Islamic Banks to decide upon the mechanism for Inter-bank placement amongst Islamic banks and to move towards the development of an Islamic Inter-bank market.
The meeting was attended by Shariah Advisors / Product Development heads of Meezan Bank, BankIslami, Dubai Islamic Bank, Emirates Global Islamic Bank and First Dawood Islamic Bank
After careful deliberation, standardized agreements – namely Interbank Musharaka and Interbank Wakala Agreements – were finalized and it was agreed that henceforth only these standard contracts would be used by the Islamic Banking industry.
This achievement is an important milestone towards development of Inter-bank market for Islamic Banks and would pave the way for the long awaited Islamic benchmark rate as an alternative to KIBOR.