Al Rajhi Bank Malaysia became the first Islamic financial institution to utilize the Collateralised Commodity Murabahah-i.
The bank will use 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," said Al Rajhi.
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 CEO Azrulnizam Abd Aziz said that through the introduction of CCM-i it has further met the requirements of the Shariah standards of both Malaysian and Saudi Arabian scholars.
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