Al-Rajhi Bank Unveils New Instrument for Treasury Operations

KUALA LUMPUR, June 21 (Bernama) -- Al Rajhi Bank Malaysia has introduced Collateralised Commodity Murabahah-i (CCM-i) as a new instrument for its treasury use, making it the first Islamic financial institution to adopt the instrument in managing its daily money market transactions. The CCM-i, based on a Commodity Murabahah transaction and backed by a pledge mechanism, was introduced as an alternative solution in addressing the urgent demand of Islamic banks in managing their liquidity. "It is a low credit-risk financial instrument for the Islamic interbank money market players under the Bank Negara Malaysia’s Standing Facility guideline," Al Rajhi said in a statement Thursday. The bank said the guideline enables Islamic banks to tap on liquidity by utilising their holdings of tradable sukuks and other acceptable Islamic securities as pledge for their liquidity requirements. Its Chief Executive Officer Azrulnizam Abd Aziz said the introduction of CCM-i is another important milestone for Al Rajhi Bank as it has met the requirements of the Shariah standards of both Malaysian and Saudi Arabian scholars. "This is achieved by precluding the principles of Bai’ Al Inah (sale and buyback), Bai’ Dayn (trading of debt), Wa’ad (undertaking) and Tawarruq Munazzam (pre-arranged transaction between multiple parties)," he said. -- BERNAMA