Al Salam Bank partners with Bahrain Bourse and CBB on new Shari’a-compliant asset-trading framework
By Edil Corneille
Al Salam Bank-Bahrain (Al Salam Bank) has signed an agreement with the Bahrain Bourse and Central Bank of Bahrain (CBB) to offer a new Shari’a-compliant brokerage service. The service allows the use of Bahrain-issued Ijara Sukuk as the underlying asset in Murabaha financing frameworks. The new structure meets a growing demand for Shari’a-compliant alternative financing solutions, which is said to have prompted a rise in global Sukuk issuances.
Bahrain Bourse and CBB have partnered with banks to create a local Shari’a-compliant trading framework using the CBB-issued sukuk as the underlying asset. Local banks are now no longer exclusively reliant on pre-traded commodities from overseas brokers in order to comply with Shari’a standards. The new service will also provide significant reductions in fees for customers and in processing time for offering banks.
Rafik Nayed, Group CEO, Al Salam Bank-Bahrain elucidated, “Al Salam Bank has a proud history of leading on local innovation in Islamic Banking. This latest service introduces a new underlying asset to our existing Murabaha financing structure, which until now has been conducted via local and international brokers. The new product not only further diversifies the commodities available to our clients seeking Shari’a-compliant products, but also provides them with a more streamlined service as it is actioned via a digital system which significantly decreases processing time.”
The service offering is the latest installment in the successful roll-out of Al Salam Bank’s 3-year strategy, focused on giving customers a choice of Shari’a-compliant banking solutions. As part of its digitisation strategy, the bank has recently launched new channels to serve its clients including a virtual branch and an onboarding app that enables clients to open their accounts within minutes.
Shaikh Khalifa bin Ebrahim Al Khalifa, CEO, Bahrain Bourse enunciated, “The newly offered Ijara-based Murabaha service is set to address the growing market demand for Shari’a-compliant Ijara Sukuk, while further enhancing Bahrain’s capital market offering and creating new opportunities for investment on both a regional and global scale. Al Salam Bank has firmly positioned itself as a pioneer when it comes to innovation in Islamic Finance, and make a fitting partner for this timely and important initiative, which has the potential to further advance Islamic Banking.”
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