ISLAMIC banks can now manage their short-term liquidity more efficiently as the central bank has decided to start conducting open market operations in Ijara Sukuk, or Islamic bonds.
The SBP had started conducting auctions of Ijara Sukuk in September 2008, providing Islamic banks (IBs) an opportunity to place their surplus funds in zero-risk, Shariah-compliant government bonds. So far, 15 auctions have been held, with the latest being held last Monday. The decision to conduct Sukuk OMOs is the second important step taken since then.
Through these OMOs, the central bank will be able to mop up excess surplus funds from, or inject money into the inter-Islamic banking system. Islamic banks, when wallowing in excess funds, will not be compelled to keep waiting for the next auction of Ijara Sukuk or employ them elsewhere in a hurry.
