Qatar Islamic Bank plans to offer Islamic certificates of deposits as early as the first quarter as the country’s biggest sharia-compliant lender seeks to create a secondary market for such instruments.
The transactions, which need approval from the central bank and the bank’s shariah board, will be transferable and tradable, with possible tenors ranging from one to five years, Choudhry Mohammed Wasi, general manager of strategy and marketing at the bank, said in an interview in Doha on Wednesday. The transactions will be backed by assets, he said.
The UAE’s central bank auctioned its first sharia-compliant certificates of deposits on November 10, offering tenors ranging from one week to one year. Bahrain, the only country in the Arabian Gulf to sell Islamic debt due in six months or less, plans to issue additional securities, central bank governor Rasheed Al Maraj said in an interview on October 27.
“We are trying to create it as a retail product, as an interbank product, as a corporate product, for all segments of our customers,” Wasi said. “Our objective is to create a secondary market where such instruments could be bought and sold easily.”
Demand for services complying with sharia is increasing about 15 percent annually and assets under management may almost triple to $2.8 trillion by 2015, according to Kuala Lumpur-based Islamic Financial Services Board.
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