The UAE's central bank said it was making it easier for Islamic banks to access its special lending facility by expanding the range of collateral they can use.
From April 1 Islamic banks, which account for roughly a quarter of banking assets in the UAE, will be allowed to use sharia-compliant securities other than central bank-issued Islamic certificates of deposit to borrow overnight from the central bank's Collateralised Murabaha Facility.
The expansion of the collateral will permit Islamic banks to obtain central bank liquidity in the same way that conventional banks do from the Interim Marginal Lending Facility, which was launched last July, the central bank said in a statement on Tuesday.
From April 1, eligible collateral will range from sukuk issued by foreign governments, which must have a minimum long-term credit rating of A, to UAE corporate entities and even some sukuk which are rated below investment grade or do not have ratings, at the central bank's discretion.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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