Islamic lenders operating in the UAE have so far invested Dh3.5 billion ($954 million) in sharia-compliant certificate of deposits, a central bank official said in published remarks on Tuesday.

Proceeds from such Islamic certificates were very close to the revenue of conventional instruments in which commercial banks invest, Seif al-Shamsi, executive director for the treasury department at the UAE Central Bank, told the Arabic language daily Al-Khaleej.

In November, the UAE central bank said it was ready to hold Islamic certificate of deposit auctions to help Islamic banks in the country to manage cash.

Islamic certificate of deposits is expected to make liquidity management more effective for the country's Islamic banks, which now lack access to the central bank since using conventional certificate of deposits is not in line with Islamic law.

Lack of tools to better manage liquidity is seen as one of the key challenges to the emerging Islamic finance industry, which has close to $1 trillion worth of assets globally.

Shamsi also said investment in certificates compatible with Islamic law was open to all banks operating in the country, both commercial and Islamic, and would help lenders to improve their liquidity management.

There are eight fully-fledged Islamic banks operating within the UAE, although most banks in the federation have an Islamic window alongside their conventional operations.

The country's Islamic assets stood at $84 billion in 2009.-Reuters