Post by Yasmine Yahya Wong Siew Ying on May 25, 2009 8:32:00 GMT 4
SINGAPORE : The Monetary Authority of Singapore (MAS) has issued two new regulations to help the local Islamic financial market grow.
The move is part of government efforts to gain a larger share of the fast growing sector, which is estimated to hit US$1.6 trillion globally by 2012.
About US$1.3 billion worth of sovereign Islamic bonds are expected to be issued by Singapore, Malaysia and Indonesia in the first half of this year.
Speaking at an industry conference, the MAS said more private sector issuers are expected to tap the sukuk market, and to attract new investors and clients.
Even though Singapore is one of the world's top financial centres, it is still lagging behind neighbours like Malaysia and Indonesia when it comes to Islamic finance.
So with immediate effect, MAS has introduced two new guidelines that will provide more certainty for financial institutions offering Islamic banking products in Singapore.
The first measure allows Singapore-based banks to enter into diminishing musharaka financing - which is a form of home financing - and spot murabaha transactions, which are contract sales between banks and their clients.
The second measure ensures that Singapore dollar Islamic bonds are given equal tax, regulatory and liquidity treatment as Singapore government securities.
MAS said these changes will allow banks to conduct a wide range of Islamic financing activities, and to have greater flexibility in structuring instruments to meet their risk management needs.
The central bank added that it is ready to issue more sovereign Islamic bonds as demand arises. MAS is also currently reviewing applications from a few banks here for sukuk issuance
The move is part of government efforts to gain a larger share of the fast growing sector, which is estimated to hit US$1.6 trillion globally by 2012.
About US$1.3 billion worth of sovereign Islamic bonds are expected to be issued by Singapore, Malaysia and Indonesia in the first half of this year.
Speaking at an industry conference, the MAS said more private sector issuers are expected to tap the sukuk market, and to attract new investors and clients.
Even though Singapore is one of the world's top financial centres, it is still lagging behind neighbours like Malaysia and Indonesia when it comes to Islamic finance.
So with immediate effect, MAS has introduced two new guidelines that will provide more certainty for financial institutions offering Islamic banking products in Singapore.
The first measure allows Singapore-based banks to enter into diminishing musharaka financing - which is a form of home financing - and spot murabaha transactions, which are contract sales between banks and their clients.
The second measure ensures that Singapore dollar Islamic bonds are given equal tax, regulatory and liquidity treatment as Singapore government securities.
MAS said these changes will allow banks to conduct a wide range of Islamic financing activities, and to have greater flexibility in structuring instruments to meet their risk management needs.
The central bank added that it is ready to issue more sovereign Islamic bonds as demand arises. MAS is also currently reviewing applications from a few banks here for sukuk issuance