The Central Bank has approved Sharia-compliant short-term financing instruments such as certificates of deposit, which should be ready to hit the market by the year's end, according to Afaq Khan, chief executive of Standard Chartered Saadiq.
Mr Khan, the head of the bank's Islamic unit, said that the creation of a short-term Islamic finance market could help address the drought of liquidity in local markets. At present, there is a "reluctance" to issue short-term liquidity for overnight, one week or two weeks, he said.
"It's very important that the Government comes up with the products and instruments to have control of the liquidity in its banking system," Mr Khan said. "It's completely Sharia-compliant and has been blessed by the Sharia boards."