The Central Bank of Bahrain (CBB) has launched a new liquidity management instrument (wakalah) for Islamic retail banks.

The instrument is aimed at absorbing excess liquidity of the local Islamic retail banks and place it with CBB, said a report in the Gulf Daily News (GDN), our sister publication.

It has been developed on the basis of a standard contract of the International Islamic Financial Market.

Banks wanting to avail of the investment opportunity need to sign a wakalah agreement which appoints the CBB as an agent (wakil) to invest cash on behalf of the bank (muwakkil).

Accordingly, the wakil will invest these funds in the investment portfolio allocated in advance, and contains Islamic sukuks.

The duration of the wakalah is one week and is available for Islamic retail banks every Tuesday.

CBB executive director of banking operations Shaikh Salman bin Isa Al Khalifa said the service is similar to what is available to conventional banks and reconfirms Bahrain's commitment to develop Sharia-compliant products.

The Central Bank of Bahrain announced that the BD35 million ($92.2 million) monthly issue of government treasury bills has been oversubscribed by 148.5 per cent.

The bills, carrying a maturity of 182 days, are issued by the CBB, on behalf of the government.

The issue date of the bills is Sunday and the maturity date is October 4.

The weighted average rate of interest is 1.06 per cent, compared with 0.80 per cent for the previous issue on March 8.

The approximate average price for the issue was 99.467 per cent, with the lowest accepted price being 99.422 per cent.

With this, the total outstanding value of government treasury bills is BD1.415 billion. - TradeArabia News Service