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Liquidity management in Islamic banking becoming a crucial issue

Posted on 18 October 2012

Banking is a business where depositors are normally free to deposit and withdraw their savings according to their preferences and financial plans. This unpredictability of behaviour put the managers under intense pressure and requires high level of skill to achieve optimality of resources at hand.
Traditionally banks manage their liquidity by investing in short term interest based securities which is not the cup of tea for an Islamic banking. Funds must emanate from a Shariah-compliant source and they need to be taken up by a Shariah-compliant source. In some places, there is no infrastructure in place to ensure that the funds are ‘clean’ Shariah-compliant. Islamic banking industry including Islamic banking windows face seriously the challenge of shortage in liquidity management instruments………………………………………..Full Article: Source

 
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Laxman - who has written 19163 posts on Opalesque Islamic Finance Briefing.


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