KARACHI (May 30 2003) : Bahrain Monetary Agency (BMA), Central Bank of Bahrain, and the State Bank of Pakistan (SBP) have decided to co-operate in Islamic banking, leasing, insurance, capital market and human resources.
The BMA, which has speciality in the Islamic mode of financing, would help Pakistan in developing Shariah-based instruments for the financial sector.
A delegation of the BMA headed by its Deputy Governor Khalid A. Bassam and Bahrain's private sector representatives held extensive meetings with the State Bank officials on Thursday.
“Pakistan's banking expertise, reforms, highly developed leasing sector and stocks boom have attracted attention of the world,” said Bassam, while addressing a press conference at the SBP head office.
SBP Deputy Governor Tawfiq Husain introduced the delegation before the press conference.
“We held detailed discussions with the Leasing and Modaraba Association of Pakistan with a view to leverage their expertise into the GCC markets,” Bassam said.
While advising the cross-border listing of blue chips in the share markets, Bassam said Pakistan's insurance sector was well developed and was highly attractive for them.
He said re-insurance and Islamic insurance were other good areas for cooperation between the two countries.
“Pakistan's stock business is impressive and its performance in 2002 reflects the strength of the economy,” Bassam said.
Tawfiq Husain said BMA was helping us in developing regulations for the Islamic banking and Islamic mode of financing.
The purpose of the meetings with the BMA delegation was to share expertise and experience, especially in the Islamic banking, he said.
To a question regarding the diversification of foreign exchange reserves, the SBP deputy governor said the bank was responsible to protect the hard-earned foreign exchange and no decision could be taken in haste.
He said most of the foreign exchange held by the State Bank was in US dollars.
When asked why the State Bank could not benefit from investing into euro, while euro had started picking up, Husain said that a Risk Management Cell has been established in the State Bank and the cell would finally decide how to diversify the reserves.
He said the cell would provide a plan for the use of foreign exchange and the board would approve it.
BMA pioneered a series of new Islamic financial instruments designed to facilitate liquidity management in the Islamic bank. Since 2001, BMA has made 23 issues of Sukuk Al Salam (Islamic Bonds) worth $ 575 million.
These Sukuk provide a short-term investment opportunity for Islamic financial institutions.
BMA has also made six issues of Ijarah Sukuk of $ 480 million for medium- and long-term investment opportunities.