MANAMA: Bahrain-based standard setting body, International Islamic Financial Market (IIFM), yesterday launched the IIFM Inter-Bank unrestricted master investment Wakalah agreement.
This global standard document, which will be used to standardise inter-bank trading, is supplemented with an operational guidance memorandum.
"This global standard documentation is developed to be used in the Islamic inter-bank market between financial institutions in order to manage their liquidity requirements," said IIFM chief executive Ijlal Ahmed Alvi.
"It is also aimed to minimise the over reliance on the use of the commodity Murabaha in inter-bank market transactions," he said.
"This much-awaited documentation standard is another milestone in the standardisation and harmonisation of the Islamic finance industry across the globe," said Central Bank of Bahrain executive director banking supervision and IIFM chairman Khalid Abdul Rahman Hamad.
"This welcome achievement by IIFM will spur the use of unrestricted Walakah in the Islamic inter-bank market.
"It will encourage all the jurisdictions to implement this IIFM standard as well as address any accounting or regulatory requirements in their respective jurisdictions," he said.
"This standard documentation has been developed in accordance with IIFM comprehensive procedure in developing global standards after consultation with the IIFM Sharia advisory panel from the early stages," Mr Alvi said.
"The operational guidance memorandum for the Wakalah agreement is one of the unique features of IIFM efforts to enhance the development of Islamic finance industry.
"The industry will find this memorandum very useful whereby it explains how the standard to be used and in addition to that it provides very comprehensive recommendations," he said.